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Auto Insurance

Auto or car insurance coverage has two parts. The first is the liability section of the policy. It covers your financial responsibility for injuring others. Some liability coverage is required by most states.

The second part of auto insurance covers the car itself: comprehensive coverage reimburses losses from fire, theft or other perils; collision coverage pays to repair losses caused by an accident. Often this coverage is mandated by leasing companies or banks. There are also ancillary medical, car rental and other coverages which vary by state.

Utilizing high deductibles on the physical damage coverages can help reduce premiums. If you carry umbrella insurance, you must be sure that you carry the required amount of basic liability insurance to avoid a gap in coverage for a serious accident.

Auto Insurance FAQ’s….

I’m renting a vehicle this weekend – does my Erie auto policy cover the vehicle I’m renting? 

Before renting a vehicle it’s important that you contact Spicer Insurance so we can make sure you are adequately protected.  In most cases, the coverage you have on your Erie auto insurance policy will automatically transfer over to the vehicle you’re renting.  If you have “full coverage” (liability + comprehensive & collision) on at least one of your insured vehicles then that same coverage will extend to the rented vehicle. 

If you do not carry full-coverage on at least one of your insured vehicles then the only coverage that will extend to the rented vehicle is your liability-coverage.  In this case, you will need to purchase the physical damage coverage from the rental agency.

**Note**  One coverage that is not covered by most auto insurance policies is “loss of use.”  If an accident occurs in a rented vehicle and the vehicle is out of service for a period of time, the rental car agency can charge a customer for “loss of use” (lost revenue).  In this situation, the rental car agency charges the customer for the revenue it will lose by having the vehicle out of service for a period of time.  We recommend that you discuss this issue with the rental car agency before renting a vehicle. 

If I lend my vehicle to my brother and he has an accident – am I covered?

Erie Insurance provides exceptional coverage to its customers and this is one example.  If you lend your vehicle to a friend, relative, etc; and an accident occurs – you’re covered.  Erie recognizes that these types of things can & do happen and they will be there for you if such an incident occurs.  If an accident occurs while someone else is driving your vehicle – Erie will be there to protect your vehicle and your legal interest.  Erie would not be under any obligation to protect the interest of the driver (unless they too were an Erie insured).

What is the difference between “full coverage” and “liability-only”?

People frequently use the terms “full coverage” and “liability-only” when discussing auto insurance.  What do these terms actually mean?  The “liability” coverage refers to coverage for third-parties.  If you’re driving down the road and you rear-end another vehicle – the “liability” section of your auto insurance policy will pay for the damage to the other party’s vehicle and any injuries they may have sustained.  If the other party files a lawsuit against you, the liability section of the auto insurance policy will pay your legal defense and any judgment up to the policy coverage limit.  Liability coverage is not optional – it’s required by law. 

By “full coverage” we mean the liability coverage described above + “comprehensive” and “collision” coverage.  Comprehensive coverage covers the insured vehicle against perils like vandalism, theft, hail, impacts with deer, windshield cracks, etc.  Collision coverage provides coverage for the vehicle in the event of an accident.  If you’re vehicle is involved in an accident, and you are at fault, if you wish to have your vehicle repaired you will need to have collision coverage in place – otherwise, you will be paying out of pocket. 

My car is now 10 years old – do I need to keep the collision coverage on it?

If your vehicle is owned “free & clear” (no liens) then this decision is completely up to you.  Once the vehicle reaches 8-10 years of age many people begin to wonder if they should drop the comprehensive/collision coverage.  This question really depends on the value of the vehicle.  In other words, if the vehicle still has considerable value then the comprehensive/collision coverage should probably be kept – at least for awhile longer.  If, however, the value of the vehicle is fairly minimal then dropping the comprehensive/collision coverage may make sense.  If you’re not sure what to do with the coverages on your vehicle – give us a call – we will walk you through the options and help you make an informed decision. 

I have a crack in my windshield – what should I do?

If you have a crack in your windshield it’s important that it gets addressed as quickly as possible.  Inaction can (and often does) lead to the damage worsening.  Fortunately, Erie Insurance has the “ErieGlass” program which will connect you with the glass shop of your choice.  The ErieGlass phone number is 1-800-552-ERIE (3743).  All you need is your policy number and a phone.  Through the ErieGlass program you can take advantage of the following….

*24/7 loss reporting.

*Low, consistent pricing with lifetime guarantees.

*The repair/replacement can be done wherever the vehicle is!  In other words, you don’t need to take your vehicle to a repair facility – they’ll come to you! 

If the crack in your windshield is small enough, the crack may be able to be patched.  If this is possible, the deductible will be waived by Erie.  If the windshield must be replaced, it will be subject to the comprehensive (other than collision) deductible.  Below is a link to ErieGlass….

When is a vehicle considered “totaled” – and what happens when it is? 

The first step in determining whether a vehicle is a total loss is to calculate is actual cash value (ACV) at the time of the loss.  The ACV is how much your vehicle is worth after factoring in depreciation.  On average, vehicles depreciate between 15 and 25% each year during the first five years. 

At Erie, your claims adjuster assesses your vehicle’s condition, then runs the make, model and year of your vehicle through an industry-leading vendor database that generates an accurate estimate of your vehicle’s current worth.  The database also considers the demand for a particular vehicle in your local market; for example, a pickup truck will usually fetch a higher price in a rural area than in a heavily populated city. 

Another factor is the resale value of the parts and metal.  This factor, known as the “salvage value,” is considered along with the cost of repair. 

At this point, there’s just one more factor to consider.  When there’s been a significant accident, there is potentially unseen damage so this possibility will be factored into the repair cost to account for that. 

If a vehicle’s cost of repair plus its salvage value exceeds the vehicle’s ACV, it is typically declared a total loss.  Fortunately, only 12% of Erie’s auto claims are deemed total losses. 

If your vehicle is a total loss, you have two (2) choices:  You can take the cash settlement for the ACV of your vehicle or, if your state allows, you can request the title and damaged vehicle be returned to you (just know that Erie deducts the salvage value of the vehicle before selling it back to you.  Erie also reports the damaged vehicle’s VIN number to a federal database so that any future buyers know it sustained major damage). 

Payment goes to the customer if the vehicle is owned outright.  If there is a lienholder, payment goes to the lienholder.  Anything left over after paying the lienholder goes back to the customer.  All payments are made after subtracting the customer’s deductible. 

Does Erie offer any type of discount for paying my auto insurance premium in full?

Yes – Erie Insurance offers a very nice discount for customers that pay annually (pay plan A).  The discount is roughly 7% vs paying monthly or quarterly.  If your policy is coming up for renewal soon please be sure to ask us about this discount. 

What is this “diminishing deductible” feature I’ve heard about?

A few years ago Erie introduced the “Erie Auto Plus” endorsement which includes a diminishing-deductible feature.  Here’s how it works – for every year the auto insurance policy is with Erie – the deductible(s) are reduced by $100. 

Example:  You’ve had the Erie Auto Plus endorsement for three (3) years when you have an accident.  The collision deductible on your auto policy is $500.  Because of the Erie Auto Plus endorsement your collision deductible is reduced to $200!  Had the accident occurred in the fifth year your deductible would be zero! 

The deductible will fall $100 every year up to a maximum of $500.  Once the diminishing deductible feature has been used, the deductible resets to where it originally was.  The cost of the Erie Auto Plus endorsement is $30/year. 

If my car is stolen, does my car insurance policy cover the items I had inside my vehicle? 

Normally if a vehicle is stolen and the personal property inside the vehicle is gone, the vehicle owner is forced to file an auto and homeowners (or renters) insurance claim.  The auto claim would cover the vehicle and the homeowners/renters claim would cover the property inside the vehicle.  With Erie however, they go a step beyond the competition – Erie’s auto policy will pay up to $500 for property lost inside a stolen vehicle.  This is very unique in the insurance industry.  Most of Erie’s competitors will not cover personal property as part of an auto insurance claim – they require a second claim to be filed on a home/renters insurance policy (if the person does not have a home/renters policy the person “eats” the loss of the personal property).

How much liability coverage am I required to have in the state of Virginia?

Each state requires a certain minimum level of bodily injury & property damage liability coverage.  In the state of Virginia, the minimum liability coverages are $25,000 bodily injury per person, $50,000 per accident, and $20,000 property damage liability.  This is often referred to as “25/50/20.” 

Example:  You are driving to work one winter morning when you slide on ice striking the vehicle in front of you.  The three people in the car you struck are all badly injured.  All three need to be hospitalized and one requires emergency surgery.  You are carrying “25/50/20” liability limits on your auto insurance policy.  Between the medical bills, lost wages, medi-vac helicopter transport, pain & suffering, etc the total amount you’re responsible for is over 500k.  You then find out that your auto insurance policy will only pay up to 50k.  In this scenario you’re left with an outstanding invoice of over 450k.  For many people this spells financial ruin &/or bankruptcy.  Don’t let this happen to you.  For only a few dollars more you can protect yourself and your family.  Ask an agent at Spicer Insurance if you have enough coverage in place – we’re here to help you. 

What do I do if I’m the victim of a “hit & run?” 

If you’re the victim of a hit & run the first thing you should do is call the police.  A police report is required in many states and we strongly recommend you contact the police before moving your vehicle from the scene.  Once a police report has been filed, we recommend you contact our office to report the incident.  All Erie auto insurance policies have an “uninsured motorist” coverage included.  Among other things, the uninsured motorist coverage is intended to provide coverage for hit & run incidents.  Subject to the deductible, the uninsured motorist section of the policy will provide coverage for damage to your vehicle as well as any injuries (if any) sustained by you or your family members. 

I own a business and I use my vehicle for business – do I need a business auto policy? 

If you own your own business and you have a vehicle titled in the business name, it should be insured on a business auto policy.  If your vehicle is titled in your personal name, but used (at least partially) for business purposes then it’s important we discuss the best option for you.  The question of whether to insure a vehicle on a personal or business auto policy can hinge on several important questions.  Among these questions are….

How is the vehicle titled?

Are there any signs (permanent or temporary) on the vehicle?

How is the vehicle primarily used – business or personal use?

Do any employees or partners of your business drive the vehicle?

These are all important questions that should be discussed with an agent.  While some be reluctant to insure their vehicle(s) on a business auto policy there are some key advantages to doing so – one of which is the tax deductibility of the premiums!

The dealership I purchased my vehicle from offered me “gap coverage” – what is that? 

Unfortunately the minute you drive your vehicle off of the dealership lot it depreciates.  This is just a reality of life.  While this has implications for vehicle re-sale purposes it also has insurance implications as well.  The example below will illustrate the issue….

Example:  You purchase a brand new vehicle for $30,000.  You put $3,000 down and finance the remaining balance of $27,000.  We have already established that the minute you drive the vehicle off the dealership lot it begins to depreciate in value.  Six months after the purchase you are involved in an accident and the vehicle is totaled.  The insurance company only owes you the “actual cash value” (ACV) of the vehicle at the time of the accident.  In your case the ACV is $24,600.  The “gap” between what the insurance company offers you for the vehicle (24.6k) and the amount you owe the bank (27k….or just under) is what you’ll be forced to come up with – unless you have gap coverage. 

Many dealerships offer gap coverage to new vehicle purchasers.  Before you purchase this coverage from a dealership we strongly encourage you to give us a call.  Our experience tells us that Erie’s gap coverage tends to be far less expensive than what dealerships offer.  Gap coverage must be added to the Erie auto policy within sixty (60) days of the vehicle’s purchase. 

Frank D. Spicer Insurance Agency offers free, comparative quotes on auto insurance from multiple insurance carriers so you can get the best possible rate.

Want to see how much we can save you? Just request a quote to find out.