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9101 Evergreen Way
Everett, WA 98208
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2027 196th St SW, #R-6
Lynnwood, WA 98036

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Key Considerations When Purchasing Auto Insurance

Liability is the most important protection you can buy and should not be scrimped upon. Liability is most often offered in split limits, which represents the amount of coverage for each person injured, the maximum the insurance company will pay for everyone injured and the for property damage. The State of Washington requires a minimum of $25k per person injured, $50k for everyone injured and $10k for property damage, which is typically displayed as 25/50/10. You would be personally responsible for damages that exceed these limits.

If you have assets, own a home and/or make a decent income, we recommend that you carry 10 times the state required coverage. If you are responsible for a serious accident, damages can easily be in the hundreds of thousands of dollars. A night in an ICU ward can be over $100k just by itself, not to mention the cost of medical transportation, surgical costs, rehab, pain & suffering and legal expenses. Ask yourself, if you were to be seriously injured in an auto accident, what would be your expectation for a settlement of the claim? Also, take a look at the other cars on the road sometime and ask yourself how many of the vehicles are over $10k in value. In Washington, the only assets protected from a judgment are qualified retirement accounts, leaving your savings, home equity and garnishment of wages exposed to legal action.

Collision is the second most expensive coverage on your auto policy after liability. Collision is what repairs your vehicle if you bang it up, whether you hit another car, a tree or even debris lying in the road. Collision would also cover the damage that you were indirectly responsible for, such as opening the door into a pole or the car rolling into a tree because you forgot to put the car in park (this happens more than you would think).  

Collision is represented in terms of a deductible, which is the amount you pay before the insurance kicks in paying the rest up to the value of the car. The deductible is your choice and can be anywhere from $0 to $2500, with the lower the deductible, the higher the cost of the insurance. $500 is the most common elected option and tends to be the best bang for the buck.

If you are not concerned about the value of the vehicle, dropping collision altogether can save money. This is especially the case if you have a young driver of if you have some scratches on your driving record, such as tickets or accidents. An easily way to calculate the cost of the insurance against the value of the vehicle is to divide the replacement cost less the deductible by the annual premium. If the result is over 5 years, it probably makes sense to keep the coverage as the average driver is involved in an accident of some kind every 5 years. If less than five years, you may consider being “self-insured” with your vehicle and drop the coverage. A simpler equation is whether you could afford replace the car out-of-pocket if it was totaled.

Sometimes there is a reason to carry collision beyond the value of the vehicle. Say for example, you are in an accident with a commercial vehicle where your car takes the brunt of the incident. You both think the other party is at-fault, but the commercial driver doesn’t want to file a claim out of fear of adversely impacting his insurance and you don’t carry collision. In Washington, an insurance company can only represent you in a claim if they have a financial interest in the claim, so without a liability claim filed against you from the commercial driver or collision coverage on your auto, there is “no financial interest” for the insurance company to represent you. Though it is a fairly rare scenario, it does happen and can be frustrating if you are the one left to battle the other party’s insurance company in an attempt to get the commercial driver’s liability to cover your damages. Insurance companies can be very good at ignoring, delaying, avoiding or simply “red taping” an individual’s attempt at remedy. And in spite of all the advertising to the contrary, it can be difficult to find an attorney to take a case unless there is the potential for a large injury settlement. Who better to fight the red-tape then another red-taper! So consider the value of collision coverage before you decide the value of the vehicle.

Liability and collision claims are usually considered as at-fault accidents and can cause your premiums to go up from a combination of an accident surcharge and/or loss of good driver discounts. Since liability and collision are the two most expensive line items on your policy and cover incidents where you are likely the cause, they are the most sensitive to driving record issues, such as tickets or accidents, as well as the age of the driver and horsepower of the vehicle.  

You should talk to your agent before filing a claim to fully understand the ramifications of that claim. Yes, you can get your wheel replaced when you run over something lying in the road, but is it worth filing it if you lose your good driver discount? Obviously if there is extensive damage, injuries or a lawyer involved, then it makes sense to file a claim. But beyond just the impact to your premium, you want to protect your driving record. Every insurance company has different policies, which will change based on the amount of losses a carrier is paying out at any given time. However, all companies have policies and procedures in place to eliminate adverse risk (i.e. bad drivers or those that file excessive claims), including raising deductibles, excluding certain drivers or cancelling policies altogether. Most insurance companies will not count uninsured motorist, medical or comprehensive losses against you, but this is not universal. So it is best to make an informed decision by discussing this with your agent before filing a claim.  

Comprehensive covers acts of nature, such as a tree falling on the car, hail damage, fire, flood, earthquake and certain animal damage, as well as theft and vandalism. Like collision, comprehensive is represented in terms of a deductible, anywhere from $0 to $2000, with $100 being the most common. Usually the cost of comprehensive is relatively reasonable and given the most common claim filed by far is rock damage to a windshield. For this reason, it often makes sense to carry a lower deductible, such as $50 or $100 to keep the out-of-pocket on windshield replacements. Some companies will cover the cost of filling a hole in a windshield without charging the deductible, but you will want to check with your agent to be sure. The resulting damage from hitting a live animal on the road is comprehensive. However, if you swerve to miss the animal and hit a tree, it is a collision. So from an insurance perspective, you are better off hitting the animal. Likewise, running into a dead carcass or even a tree lying in the road would also be considered a collision loss, so if you are going to hit one of these objects, make sure it is moving at the time of impact!

Uninsured motorist coverage defaults to the same limits of coverage as your liability coverage, though it can be adjusted to fit your needs. Uninsured motorist covers the injuries to you and/or your passengers, as well as the damage to your vehicle that is caused by someone that does not have insurance or if they do not have enough insurance (if your damages exceed the at-fault party’s liability limits and you have a higher limits on your uninsured motorist, your policy would cover the difference between their liability and your uninsured motorist). Relatively speaking, uninsured motorist coverage is cheap in comparison to other coverage. This is not because there is a shortage of uninsured drivers on the road. Some estimates put the percentage of drivers on the road that don’t have insurance as high as 40%. The reason the premium is relatively cheaper is you are already paying for some of risk with collision. Uninsured motorist property damage coverage comes standard with a deductible of $100 if the other party is known and does not have insurance or $300 if the damage was caused by an unknown party, such as in a hit and run. So you are really paying an additional premium above your collision for a lower deductible that comes with uninsured motorist.  

Auto policies offer the choice of optional bodily injury coverage for you or your passengers. Personal Injury Protection offers a choice of a $10k or $35k option and covers doctors, hospitals, ambulance, surgery, rehab, chiropractic, message, etc. It also comes with a small amount of lost wages, death benefit and assistance around the home for the named insured. Medical covers bodily injury, but does not have the lost wages, death benefit or loss of use that comes with PIP. For this reason, medical is typically cheaper and offers more coverage limit options than PIP.  

Neither PIP or medical are intended to replace your personal health insurance, but are intended to help pay for out-of-pocket expenses that your personal health insurance might not cover. However, in the state of Washington, your medical insurance will cover auto related injuries if you don’t have any available medical coverage on your auto or if you exhaust the available medical coverage on your auto. For this reason, there is a bit of overlap between the medical on your auto policy and your health insurance. Some people will elect to drop PIP or medical all together if they feel their personal health insurance is adequate. However, you may consider carrying some medical coverage for your passengers, especially if you carpool or give rides to friends or friends of your kids (think soccer moms). If a passenger that is not of your household is injured in an accident that is your fault, your liability will pay for their injuries. However, liability does not kick in until after the injuries are completely healed and the party is ready to settle for the total of the damages plus pain and suffering. In the case of serious injuries, it can be months or even years before a final liability settlement is reached. Some large medical institutions will hold the bills on a liability claim until the time of settlement, but the medical coverage on an auto policy can help pay for the out-of-pocket expenses until the time of settlement for those that don’t have health insurance, plans that don’t pay for certain kinds of care or small care providers that require payment at the time of service.

There is other coverage that can be selected on an auto policy. For example, rental car reimbursement, towing, sound system, custom parts, death and dismemberment, etc. You should discuss with your agent whether any of this coverage is important to your situation. Don’t assume that you will automatically have your rental car paid for on any claim (some claims, such as uninsured motorist, will pay for rental, other won’t) or that your custom 22” rims will be covered at full retail value. It is better to ask before a claim if that subwoofer in your backseat would be covered for theft before it takes a walk down the street (by the way, it most likely would not be covered).

Teen Driver

• Car accidents are the number one killer of teenagers, causing more deaths than drugs, illness, violence or suicide. Parents are the number one influence on teens driving habits. The majority of teens killed in car crashes were not wearing seat belts and there are far more single car teen accidents than adults. The rate of death for teenagers also increases exponentially the more passengers there are in the vehicle and 20% of teen vehicular deaths are due to alcohol. Driver error is much more common in teenage driver accidents than adults and excessive speed is a factor in over a third of teenage accidents. The crash rate for teens driving at night is four times higher at night that adults.

Young drivers are six times more likely to be involved in an accident than someone over the age of 25, thus they are charged accordingly. Controlling the cost of a young driver starts by carefully selecting your liability limits and collision deductibles or even dropping collision altogether. Of course, one of life’s catch-22’s is the young driver is the one that is most likely to need higher coverage, so consider the worst case scenario when making your budget.  

There are often discounts for good grades and taking a defensive driving course that can help with the expense. However, having less vehicles in the household than drivers will go a long way to keep the price down (so if you have two adult drivers, one young driver and two vehicles, the young driver would be a part-time driver on one of the vehicles that is primarily rated for the adult). If you do add a third vehicle to the mix, you might consider having the young driver rated on an older vehicle that has low horsepower and gross vehicle weight. Small pick-up trucks tend to rate the best. Obviously, it is critical for the young driver to keep their driving 
Our partnership with Washington Motorist Safety Training allows us to steer parents in the right direction when it comes 
to saving on insurance for their teen drivers.