Large retailers like Walmart and Overstock.com have recently announced they are providing shoppers the ability to add insurance to their carts. Of course, leveraging their size to sell commodities at a lower cost is what Walmart and Overstock.com do very well. Unfortunately for consumers, insurance is NOT a commodity, not even car insurance. This inconvenient truth has not deterred Walmart or Overstock.com from perpetuating and trying to cash in on this dangerous myth.
Let the buyer beAware: there are subtle yet dramatic differences between even car insurance policies that consumers need to be aware of. Bill Wilson of the Insurance Agents and Brokers of America is an educator and insurance consumer activist, helping both agents and consumers to better understand the important “policy fine print” that differentiates coverage among carriers. Listed below are examples Wilson provides to illustrate the important coverage often omitted from the policies advertised as “same coverage, better price”.
- Undisclosed household residents are excluded. Think “boomerang” kids living at home.
- Business use of non-owned autos is excluded. Have you ever borrowed a neighbor’s car or had a dealer loaner auto and made a business stop?
- Business use of ANY auto is excluded. Big problems for those driving to Staples or the post office on business
- Use of ANY non-owned auto is excluded. Better not drive anyone’s car but your own.
- Vehicles over 10,000 GVW are excluded. Have you ever rented a U-Haul truck or an RV thinking your liability coverage extended to the rental?
- Any type of delivery is excluded. Denied claims include pizza, newspapers, Mary Kay cosmetics, and, yes, even the delivery of insurance policies to customers by an agency producer.
- Permissive users only get minimum limits of coverage. This can apply to those you loan your car to or even unlisted household drivers.
- “Street racing” is excluded. Google “street racing” and see how often people are killed or critically injured while street racing.
- Criminal acts are excluded or limits reduced. Don’t think bank robbery; DUI or even speeding tickets may preclude coverage.
- Medical payments only include licensed physician fees. One insured incurred a $25,000 “Life Flight” helicopter fee that would not be covered, even in part, by a policy with this exclusion.
- Theft without evidence of forced entry is excluded. One insured had a four-figure vehicle theft loss denied because he forgot he had left his keys in the car.
- Sales tax is not covered under loss settlement. This cost one “same coverage” insured over $2,000 out-of-pocket for sales tax on a replacement auto.
I can think of additional examples of protection present in some auto insurance policies but not in others. The important take-away for consumers: knowing the protection provided by different insurance policies varies, be very wary of the modern-day shell game tactics used by sales organizations (of any variety) assuring you they are offering “the same coverage for less”.