Texas law is clear: Drivers have to carry car insurance. However, while there are minimum coverage requirements, there is no restriction on a driver carrying extra coverage. So, as an insurance agent, you have an obligation that the driver meets all their coverage requirements. However, you should encourage them to carry additional coverage. The more they have, the more they might benefit. Consider some of the ways that additional policies might help your clients.
Understanding Additional Coverage
When someone calls you for an auto insurance quote, they might or might not know what coverage they need or want. It's your job to help them settle the on the right policy.
Of course, policies will have to contain the coverage required by Texas law. All the same, you can encourage the applicant to purchase extra coverage. While you cannot choose for them, you can at least help them understand the benefits of additional protection.
The bottom line is that more coverage equals more protection, and better chances of a satisfied client. Don't hesitate to tell your clients how much extra coverage can help them.
Expanding And Explaining Policies
Once you start to set up a client's policy, walk them through how much assistance their policy will provide them. Take the time to explain the most-important aspects of their coverage. Those you might touch on include:
Liability Coverage
Also called at-fault insurance coverage, this coverage helps the policyholder compensate others if the insured's mistakes lead to accidents or other vehicle losses. If you make the mess, you might have to clean it up, and this is the coverage that will help you do so.
Texas requires most drivers to carry liability coverage, and they must have policies that contain at least:
- $30,000 Bodily Injury Liability Coverage per person
- $60,000 Bodily Injury Liability Coverage per accident
- $25,000 Property Damage Liability Insurance
The bodily injury liability coverage will pay for the injuries and related losses that other people (other motorists, pedestrians) sustain. Property damage coverage pays for damage done to their possessions, such as their vehicles or other material assets.
You should make sure a client understands that this is just the minimum coverage. They can often add extra liability limits to their policies. In case of particularly severe accidents, they might be able to access other funds to help them compensate those harmed by their mistakes.
Physical Damage Coverage
Physical damage insurance will pay for damage the insured party's car sustains. Most policies offer two types of physical damage coverage:
- Collision Insurance pays for damage sustained in wrecks.
- Comprehensive Coverage pays for damage that is not related to accidents — such as damage from theft, vandalism, severe weather, fire, flooding, falling objects and related occurrences.
Work with your clients to determine how much money they can afford to pay for vehicle damage themselves. This can help you advise them on setting their deductibles.
You can also help them determine if they will benefit from Replacement Cost Balue (RCV) Policies or Actual Cash Value (ACV) Coverage. If the vehicle is a total loss, ACV policies will pay the driver the value of the vehicle at the time of the accident (which is usually less than a new-car value). RCV policies will pay a value comparable to that of a new vehicle.
Uninsured/Underinsured Motorist Coverage
With this coverage, the insured party gets extra help in the event they become the victim of another driver's negligent actions. If an accident was another driver's fault, then they might have a duty to use their liability insurance to compensate the other party (in your case, your client). However, there is a chance that the at-fault driver might not have appropriate liability insurance.
If this is the case, your client might be able to turn to their policy for assistance.
- Uninsured Motorist Coverage will pay for the policyholder's losses when the at-fault party has no liability coverage at all.
- Underinsured Motorist Protection pays if the insured's claim exceeds the value of the other driver's liability policies. This policy will pay the difference.
Encourage your client to carry this coverage because of how it can help them avoid penalties from accidents for which they had no fault.
Medical Expenses Coverage
If your client gets hurt in a wreck, they might assume that their health insurance will cover them. It will, but it might leave outstanding costs that can add up quickly. It also won't cover such costs as lost income. By getting medical expenses insurance, your clients can receive an additional supplement to help them cover their outstanding costs.
By getting optional coverage, a driver will get more protection. Therefore, the amount of money they might have to pay out of pocket for vehicle losses could drop significantly. As a result, even if they have to pay more for additional coverage, they likely won't have to pay for their damage costs, which are often much more expensive than a simple policy premium.
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