All about car insurance

Seemingly insignificant caveats and clauses hidden deep in the fine print of auto insurance policies often make the difference between good policies and bad ones. You can ask your insurance agent the following questions before signing a car owner insurance contract and ensure that the identical answers can be found on the policy itself.

Is it a "family policy" or a "named-insured-only" policy?

Family policies protect each of the in-house drivers and anyone to whom they lend their vehicles, while "name-only" policies only cover drivers specifically named in the policy. Family policies are likely to cost an additional 10% to 15% (or more based on many factors, such as the driving records of one of the other drivers), but they're the right choice if someone other than the policyholder will ever drive the car. Many car owners don't even understand that they have name insurance policies, and they lend their vehicles to friends and family, unaware that they may not be insured in the event of an accident.

With this policy, do I have the right to choose my own repair facilities and choose Original Equipment Manufacturer (OEM) parts?

A number of insurance agencies, including Geico, Nationwide and Progressive, have reworded some auto insurance contracts to limit auto owners' repair choices after accidents. The use of aftermarket parts - parts not manufactured by the vehicle manufacturer - in the vehicle may void the warranty. For example: your radiator needs to be replaced after a car accident. A year later, your engine breaks down. The dealer will likely not honor your warranty because of the aftermarket radiator.

Does this insurance have a valuation clause?

This clause allows the policyholder to obtain an appraisal if the insurance provider offers you a lesser amount for a totaled vehicle than the policyholder believes it is worth. Also ask: Does this appraisal clause allow a third party to be appointed by a “court”? With this method, if the policyholder and insurance company appraisers cannot agree on who to select as arbitrator, each appraiser could seek the appointment of an arbitrator by a court of competent jurisdiction to break the deadlock. If the answer to any of the questions is no, be warned. You can be powerless when your insurance company claims your car is worth less than its Kelley Blue Book or NADA (National Automobile Dealers Association) benchmark.

Does the “Limitations of Liability” section of the contract contain the phrase “as defined by us”?

This particular part of your auto insurance policy sets limits on how much the insurer will pay. It could read that the insurer cannot pay "more than the prevailing hourly labor rate of repair shops in the area" or "no more than a competitive estimate of the cost of repairs".

Unfortunately, some insurers have begun to add the phrase “as defined by us” to the completion of statute of limitations clauses in some contracts, effectively giving the insurance company the right to insist on repair rates below market value. Your policyholders must either take their vehicle to the insurer's 'approved' repair shop, which will be willing to make repairs at that low rate, or take the car to a better repair shop and pay the difference up front.

Where to find the best insurer

Some insurance companies responsibly look after the interests of their clients, while others mainly consider their own profits. Wise ways of saying which are which...

Examine the extent of customer problems. Call your state's insurance department and ask which insurers have the lowest customer complaint rates.

Examine customer satisfaction ratings. Economic research firm JD Power and Associates produces its own annual auto insurance customer satisfaction survey. The latest ratings can be found at http://www.jdpower.com/autos/ratings/autos-insurance.

Get suggestions from workshop managers or owners. Ask which insurers take good care of their customers and which are trying to save on repairs.

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