content top

Leasing, Parts, and Car Insurance

Leasing, Parts, and Car Insurance

I had an interesting conversation with a new client the other day. She leases her car and wanted to confirm whether the car insurance policy covers manufacturer parts, also known as original equipment manufacturer or OEM parts, or would they insist on using third-party parts to repair her car if she files a car insurance claim? No client or prospective client has ever asked that question and it told me she’d either experienced or seen a claim go sideways. I’ve written about how many car insurance claims departments specify the use of third- party parts before (see http://wiseinsurancegroup.com/third-party-parts-and-car-insurance-claims/). The reason is simple; they cost 20% to 50% of what OEM parts cost. However, the discussion pointed out a big difference between cars which are owned and / or financed versus leased which most people aren’t aware of. If you purchase a car the finance company or bank does not specify what type of parts are used to repair your vehicle when a car insurance claim is filed. The insurance company is free to use any parts that fit, new or used, to repair your vehicle. Owners continue to make payments until they’re ready to replace it with a new or newer vehicle. You may not like the fact a third-party part was used to repair your vehicle but the bank or finance company doesn’t stipulate what kind of part is used. This isn’t the case with a leased vehicle. Most lease agreements require OEM parts be used to repair your vehicle if a car insurance claim is filed. The reason is they want to sell your vehicle once the lease is finished and they know third-party parts result in a diminished value. If your car insurance company only pays for third party parts, as most do, then it’s the policyholder’s responsibility to pay the difference in cost between the third-party part and the OEM part, which can be significant! This experience happened to my client when she bought car insurance from a different agent before we met. Like most people, she was angry about the experience. I explained to her most of the car insurance companies I write policies with offer OEM parts coverage as an option. It cost a little more each year to add this to the policy, however, it can save the policy holder a significant amount of money should they have an accident or comprehensive claim. If you lease your vehicle, please ask whether OEM parts or covered. If not, ask if you can add this coverage to your existing policy. I know I’d rather pay a little more now than be faced with a much larger bill because I...

Read More

Metal Roofs and Home Insurance Surprises

Metal Roofs and Home Insurance Surprises

I’m a little partial to homes with metal roofs. They are resilient, look pretty, and there’s nothing like falling asleep to the sound of rain falling on one. Most home insurance companies tend like them too as they last long and are fire and hail resistant. There are some home insurance policies though, that may contain a surprise most homeowners aren’t aware of. Most home insurance companies will write a home with a steel or metal roof. There are a few though that won’t if it’s a tin roof, but they tend to be the exception. There are several carriers, however, that exclude cosmetic damage to a metal roof whether caused by hail or a falling tree limb. In these instances, a roof covered with dings from hail which doesn’t leak won’t be replaced since cosmetic damage is excluded. The reason for excluding cosmetic damage is simple, the carrier does not want to pay for replacing a roof that looks damaged, but is still structurally sound. This is largely due to metal roofs costing more than composition shingle roofs. If you’re not aware of this exclusion, it can be an awful surprise for the homeowner! Such was the case with a woman who called me to help her with a policy on her new home. The new home has a metal roof and she was concerned that cosmetic damage not be excluded from the policy I recommended. Her concern was due to watching what a friend experienced when their hail claim had been declined by a carrier who excludes cosmetic damage to metal roofs in their home insurance policy. The policy I recommended to her includes coverage for cosmetic damage from hail. This carrier, as do a couple of others, provides a discount if cosmetic damage is excluded, however, I don’t think that’s a good discount. Who wants a home with a roof that looks like it was beaten with a hammer?! Including cosmetic damage coverage for your home’s metal roof is easy if you have the right home insurance policy. The key whenever reviewing a new home insurance quote is asking questions such as, What coverage is included? What coverage is excluded? Are there any coverage limitations with this policy? Asking these questions may have helped my new client’s friend avoid an awful surprise, although, it would have been good had the information been volunteered. What do you think? Share your thoughts, questions, and experiences with me. I’d love to hear from you! Thanks! Ed Wise Share...

Read More
content top