What is Auto Insurance?
A personal auto policy covers passenger type vehicles. This includes cars, minivans, SUVs, pickup trucks within a certain weight range, and other four-wheeled vehicles used on public roads.
Who Does It Cover?
You, as the named insured, and your licensed, residing family members are covered, as is anyone who uses your vehicle with your permission unless specifically excluded. If you loan your car to a friend and they get in an accident, your auto insurance policy will provide coverage for damages incurred.
What Does It Cover?
Auto insurance protects against economic loss resulting from an accident, theft, vandalism and other damages.
- Liability Coverage – provides protection against economic loss for bodily injury and property damage to others when you are legally liable.
- Collision Coverage – after a deductible, collision coverage pays for damage to your vehicle in an accident, regardless of who is at fault.
- Comprehensive Coverage – pays for damage to your vehicle from perils such as fire, theft, vandalism, falling objects, and glass breakage, for example, if a tree falls on your car.
- Personal Injury Protection (PIP) – pays whether you are responsible for an accident or not. It pays for medical expenses and lost wages for you and your passengers.
- Medical Payment Coverage – pays for your medical costs and those of your residing family members when injured while occupying your car or when they, as pedestrians, are struck by another car. This coverage also protects any other person while occupying your vehicle.
- Uninsured Motorist Coverage – allows you to recover bodily injury damages from your insurance company if you are in an accident caused by an uninsured driver. Some states offer uninsured motorist coverage for property damage.
- Underinsured Motorist Coverage – protects you if you are involved in an accident, are not at fault, and the other driver does not have enough insurance to cover your injuries. It does not pay for damage to your vehicle.
How Are Rates Determined?
Rates are determined by gender (men pay more than women), age (younger drivers pay more than older folks), history of moving violations or DUIs, and your geographic location. Your credit score can also be used to determine your premium.
How Can I Keep My Rates Down?
There are many ways to keep your rates down. The following are some of the most common discounts:
- Driving Class – most auto policies provide for a reduction in premium when you complete an approved accident prevention course. The discount is usually applied for three years.
- Multi-Vehicle Discount– when you insure more than one vehicle under your policy, you will receive a multi-car discount.
- Good Driver Discounts – are available to drivers who have not had an at-fault accident for some period of time, typically, three years.
- Good Student Discounts – are available to students who maintain good grades, generally a “B” average or better.
- Memberships – you can receive a discount for association or club membership in an alumni association, professional association, and other groups.
- Multi-Policy Discount – you are eligible for a multi-policy discount when you insure your car and home with the same company.
- Deductible – Choosing a higher deductible is a way to cut your premium cost.
- Car Type – the type of car you drive will affect your premium rate. Fiberglass cars are more expensive to repair than metal cars, and luxury vehicles are more expensive to repair than non-luxury vehicles. Hybrid vehicles can also be more to insure as the cost to repair or replace the battery is often run anywhere from $1000 to $6000 and up depending on the year and model of the car. This does not include the cost of labor.
How Much Coverage Do I Need?
State law requires minimum amounts of liability coverage, for example, 25/50/15. This means the policy pays $25,000 for bodily injury to or death of one person in one accident; $50,000 for bodily injury to or death of two or more persons in any one accident; and $15,000 for damage to property in any one accident. You may want to purchase additional amounts of liability coverage if you have significant assets to protect.
How Do I Choose the Right Coverage?
There are several factors that affect choosing the right coverage. First is the amount of assets you have to protect. If you don’t own much, you may want to stick with the minimum requirements. The age and condition of your vehicle is a consideration, too. If your car is an older model and not worth a lot, you may want to forego collision and comprehensive coverage. If you are an experienced, cautious driver, you may consider increasing your deductible. Finally, if most of your driving takes place in rural areas, you are less likely to have an accident than if you drive mostly in urban areas with a greater population density. This might be a factor in choosing your liability and property damage limits.
Throughout our experience, we routinely find that most people are over insured in the areas they need coverage the least and under insured in areas they need coverage the most.
Whether it is a cracked windshield or a serious collision our agency is available to prepare and assist you with your auto insurance needs.
We can help you choose the right coverage and show you how affordable it can be.