Learning Center (Auto Insurance)

Overview

Not only is it a good idea to insure yourself and your belongings, in many states it is law.  Specifically concerning automobile drivers, most states require that you either maintain a minimum limit of liability insurance or proof that you have the financial backing to pay for any damage you may cause to another person or property with your vehicle.  Similarly, mortgage companies other lending institutions can and do require that you insure their interest on any property they lend you the money to purchase (your car or home).

Auto Insurance

Essentially, when you sign your auto insurance policy, you are agreeing with the insurance company to pay a fee in return for the promise to pay for losses that may occur, specific to the policy terms and conditions.

But do you know what you are really covered against?

Liability

This provides coverage if you (or any covered driver) are legally liable in an auto accident.  The Bodily Injury portion of this coverage is specifically for bodily damage to another person or persons.  Your coverage will have limits both per person and per accident.  For example if you carry 50/100 Bodily injury, you are covered up to $50,000 per person and up to $100,000 per accident.  Property Damage Liability is also afforded.  This covers you for any damages you are legally liable in reference to property i.e. the other driver’s vehicle.  However, vehicles are not the only property you can damage with your car. This coverage will extend to signs, fences, houses and other property belonging to others.

Un/Underinsured Motorist

Commonly coded as UIM, this coverage really protects you.  You may hear all the time how the number of uninsured drivers is increasing.  UIM safeguards you against a motorist who causes injury to you or your vehicle, but does not carry liability insurance.  Also included in this coverage is protection for Hit and Run and underinsured situations.

It may surprise you to know that you can have coverage if the at-fault party leaves the scene.   Some motorists’ carry only what the law requires them to, what if they cause extensive damage to you or your family members?  Your UIM can help pick up where their liability coverage leaves off.

You may know that you have “full coverage” but what does this really mean?   

Full coverage is a term which means you have coverage for your own vehicle in case of an at fault accident or other covered loss. 

Collision is considered collision or upset of the covered vehicle

Comprehensive losses are any other type of loss i.e. theft, vandalism, rising water, glass breakage, etc. You can choose your deductible for both types of losses, they do not need to be equal.

Deductible

When your insurance pays a claim, they will compensate you for the Actual Cash Value of the vehicle or amount of damage minus the amount of your deductible.  Although it may increase your premium, it is best to include deductibles no higher than what you can afford at any given time “out of pocket”.

Towing Coverage

Towing coverage is a very inexpensive coverage that will help offset the cost of having your vehicle moved or serviced on site.  Most commonly, this coverage is actually a reimbursement.  You’ll have to pay for the service, then provide you agent or insurance company with the receipt.

Rental Car

This covers the cost of your rental car only if your need is as a result of a covered loss.  Rental car will also cover the other drivers rental car if you are at fault.  Generally, your vehicle will have to be in the shop for two business days before your insurance begins paying.

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