Sun 24 Nov 2013
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Most policies sold in the US are known as full coverage. About fifteen percent of motorists buy only liabilities cover. Another fifteen percent don’t purchase any type of coverage at all. This is worrying for people who share those roads with these uninsured drivers. But this is a topic that can take over this article and therefore we are going to leave it out at this time. About seventy percent of drivers buy full cover this mostly include uninsured motorists.
Almost all auto insurance companies sell full cover but their content, terms and conditions can be significantly different. One area you need to carefully look at is the exclusions in your policy. There is a common practice that some companies exclude natural disasters where these are likely to happen. This could create a serious problem for motorists who suffered in one of those storms or hurricanes.
It is probably more understandable if we explain this with an example. Some areas are known for being high risk for certain natural calamities. For example, California is on an earthquake zone. This means that insurers will have to pay large sums of money if cities like Los Angeles hit by an earthquake. So, quite a few policies sold in California excludes earthquake. This doesn’t make sense you probably say and it is true that it doesn’t. Why would you want a policy that excludes one of the known risks?
The problem is that a big quake can cause billions of damages and wipe out insurance companies. In order to protect themselves from this risk they include an exclusion in their policies. There could be similar exclusions in other areas. For example, Louisiana may have a hurricane exclusion. This is a way of controlling the risk as far as companies concerned. There may not be any big calamity for years in certain areas but they cannot take a chance.
The problem is that nobody knows the possible losses if there were one of those big natural disasters happened. Therefore, it is hard to price against such losses. If companies included those risks they have to be on the cautious side and charge large sums of money. This would make the policies sold in this particular state very expensive. Maybe it is more manageable for both policyholders and insurers to exclude certain risks.
Nonetheless, you can still make additions to your policies to include all the natural disasters. The premium will be higher but it is an option available with most providers. The first step is to check if your policy excludes the peril you are most worried about. You may find that it may already include them against all the odds. Then, you don’t need to do anything and don’t worry about being hit by one of them.
Otherwise you contact your insurer or broker and get a quote for including the risks in question. This will tell you how much more premium needs to be paid. At this point you can make your own assessments as to paying up or forgetting about i.
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