New Coverage Enhancements Available Now

On April 1, 2008, the new “managed competition” in Massachusetts brought not
only competition in terms of the “rates” and “premiums” you pay for your auto insurance,
but also enhanced coverage options. Here are generic descriptions of
some of the enhancements now being offered by auto companies.

Accident Forgiveness

This enhancement “forgives” a driver for their first at-fault accident within a specified time frame, most commonly 36 months. Your accident is forgiven and your rates/premium will not increase on your next renewal policy as a result of this first accident. Only one accident per policy can be forgiven within the specified time frame which varies by company. All additional at-fault accidents occurring within the allowed time frame will be surcharged.

Disappearing Deductibles

This coverage reduces your collision deductible by $100 per year for each full year you are accident free, generally up to a maximum credit of $500 over five years. As an example, assume your collision deductible is at $500, and you have an accident in the fourth year after this coverage has been added to your policy. Since you were accident free for three full policy years prior to the accident, your collision deductible at the time of loss will be reduced by $300 (three years @ $100/year), and your actual deductible will be only $200. The deductible on the renewal policy after the at-fault accident will revert back to the original policy deductible. The reduction starts over after the policy is free of any at fault accidents for a complete 12 month renewal term.

Loan/Lease Gap Coverage

This enhancement provides coverage in the event of a total loss to your auto for any unpaid amount due on the lease or loan outstanding on your auto. In other words if the book value of your auto is less than what you still owe (or the lease requires as a payoff), the company will pay the difference.

New Vehicle Replacement

This enhancement only applies to new vehicles, and generally applies for one year from the date of purchase on the bill of sale, or an odometer reading of 15,000 miles, whichever comes first; these terms and conditions vary by company. It provides coverage only if your auto is declared a total loss by the company.  In that event, the company agrees to replace your auto with a new auto of the same make, model and equipment or pay the replacement cost of your vehicle without any deduction for depreciation.

Original Equipment Manufacturer’s Parts

This enhancement guarantees that a company will use original equipment manufacturer’s parts in the event your auto is damaged as a result of a covered loss. The length of the guarantee varies and is usually only provided for new model vehicles or up to a specified number of miles on the odometer (usually no more than 15,000).

Additional Enhancements Available