Does Your Auto Insurance Policy Include OEM Parts Coverage For Your Car?

Most people buying a new auto insurance policy don’t stop to think about the parts will be used to repair their cars if they are involved in an accident.  Most of us assume that our vehicles will be fixed and put back on the road, as good as new.  But in North Carolina, the law and the auto insurance policy language could leave you with some bad feelings after the dust has settled on your claim. 

OEM stands for original manufacturer’s equipment.  This terminology is used for parts that were manufactured by the original car company for your car.  In NC, car insurance companies are not obligated to pay for OEM parts when paying for damages to your wrecked vehicle.   Since OEM parts usually cost more than non OEM replacement parts, most repairs are not done with replacement parts that were manufactured by the original car manufacturer.

Now these non-OEM replacement parts may or may not be as good or even better quality than OEM parts.  But that’s not the point.  The point is that most people have expectations that include OEM parts being used to repair their cars.  Let’s face it, many of us have personal relationships with our cars and don’t want to feel cheated after an accident and repair work.   There is a simple solution to this problem but it requires that you take action before your car is damaged.  Most insurance companies doing business in NC have an OEM parts endorsement that you can add to your auto policy to make sure that the costs of these parts is covered if you have a loss.  Some restrictions apply to the OEM endorsement on the North Carolina auto insurance policy.  For instance, most insurance companies will require that you add this endorsement within 60 days of the purchase of a new vehicle.  Usually you can only add the endorsement to a vehicle that you purchased brand new.  Also, most companies will drop this coverage once your car is over 7 years old.  One company that we represent will let you add OEM coverage at any time and will allow you keep it on the policy until your vehicle is 10 years old, so there are some exceptions to these rules.

The cost of this protection is usually about 5% additional on your comprehensive and collision insurance premiums.  Now, keep in mind this other issue:  Even if you buy OEM coverage for your car, if you are hit by another person and that person is at fault, then your claim will be handled by the other person’s insurance company.   Letting them settle the claim with you will mean your OEM protection will not apply.   You can get around this by filing a collision claim with your insurance company so that you can benefit from the OEM endorsement on your policy.  If you do it this way, then you will have to pay the collision deductible on this claim out of your pocket and wait to be reimbursed by the other party’s insurance company if and when your insurance company files a subrogating claim against them and collects.  This may take some time or might even never happen, depending on the size and complexity  or the claim.

This is just one illustration of how complex North Carolina auto insurance really is.  There are many things for you to consider when buying your auto insurance policy.   From just this one example you can see that do it yourself car insurance is a bad idea.  Here at Clinard Insurance Group,  we write thousands of auto insurance policies for our customers located all across the state of North Carolina.  We will take as much time as you need to make sure that you understand all of your options and that you are completely comfortable with your choices.  Please give us a call for help with your auto insurance or your home insurance.  You can reach us toll free, at 877-687-7557.

What Are The Insurance Companies Leaving Out Of Their TV Ad Offers?

I am amazed at the number of TV ads that are devoted to convincing you to switch auto insurance companies to save money.  They are almost so common place that we don’t even notice them anymore.   While I think that anyone who shops long enough can always find a lower rate on their car insurance, a 2009 survey discovered that only 14 percent of people who shopped around for a better rate on their car insurance found that they could save money by switching companies.  Still, the ads continue to bombard us with new and interesting gimmicks and twists that will entice you to start shopping.  So what about these gimmicks, do they save you money or are they just marketing tricks?  I want to pull back the curtain on a few of them to give you an idea of what you are up against.

One of the newer gimmicks is the Nationwide Insurance vanishing deductible trick.  It seems like a great idea; Nationwide will reduce your deductible by $100 for each year that you don’t cause an accident or turn in a comprehensive claim like windshield, vandalism or theft of your vehicle.  Of course if you have a claim like that then your deductible will then go back up to the original level, minus a $100 sign up reduction.  No more than $500 of your deductible can ever disappear.  What the blurry fine print on the screen says is that this program will cost you $60 per year per car.  So this means that you would be paying $60 per year for $100 of protection that you will probably never need.   This is a great deal for Nationwide and not such a  good deal for you.  If you are truly a safe driver and have few claims, then I would advise that you take the highest deductible that you can afford and apply some of the savings to making sure that you have very high liability limits.

Another interesting ad is the Progressive Insurance snapshot program.  Right now, this is only available in 39 states and North Carolina is not one of them.   This program installs a big brother like device into your car’s diagnostic system and sends your driving information to the insurance company.  Now in theory, I like the idea of rewarding good drivers for their good driving habits.  But the problem with this program is that your driving habits will have to be the crème de la crème of all drivers in this program for you to see the huge discounts that they project in the ad.  Under a system like this which is voluntary, only the safest drivers will sign up and those drivers are now your competition for the discounts.  Let’s not forget the creepiness of having your insurance company checking out all of your driving habits.  It would be like me riding around in your back seat everywhere you go, making quiet notes on my clipboard and giving you disapproving looks in the rear view mirror.

Another highly advertised program is the accident forgiveness program.  Allstate insurance pushes this program but the details reveal that it may not be such a great deal for you.  First of all, you will have to pay extra to enroll in this program.  And in North Carolina, there is already a first accident forgiveness program built into the regulations.  To learn more about that, click here.   If you are generally a safe driver, then this program usually means that you end up paying for something that you will never need.  And the offered rebates for safe driving have to come from somewhere.  As you may have guessed, the insurance company will need to collect this money from you in advance in order to give it back to you later.  As evidence, Allstate recently reached an agreement with California regulators to stop selling their Your Choice program there after a lawsuit alleged that the program overcharges policyholders and that the costs for this program were deceptive.

A critical view of these programs might lead you to believe that these special programs are not designed to save you money on your car insurance, but rather to get you to call them for a quote in the first place.  I would advise that you take the time to find an independent insurance agent that you trust.  Choose one that will take the time to listen to you and discover your needs and then go out and shop the marketplace of insurance companies to find the program that is best for your unique situation right now, and in the future.  Car insurance is complicated and critical to your financial wellbeing.  You are trying to protect all of your possessions and your income stream and this should not be a do it yourself project.

Clinard Insurance Group is an independent insurance agency.   We insure more than 5000 families all across North Carolina and we want for all of our clients to be informed insurance consumers.  We will take as much time as you need to be sure that you are comfortable and have a full understanding of the insurance policies that you purchase from us.  If we can help you with your homeowners insurance, your auto insurance, your life insurance or even your business insurance, please call our office, toll free at 877-687-7557 or visit us on the web at www.ClinardInsurance.com.