Auto Insurance is effectively a contract between yourself and an insurance company in which you agree to pay premiums in exchange for protection against financial losses stemming from an accident or other damage to the vehicle. Auto insurance can offer coverage for:
Vehicle damages, including your car or another driver’s vehicle
Property damage or bodily injuries caused by an accident
Medical bills and/or funeral expenses associated with injuries sustained in an accident
02.
Why do you need Auto Insurance?
When you buy or lease a car, it’s important to protect that investment. Getting auto insurance can offer reassurance in case you’re involved in an accident, or the vehicle is stolen, vandalized or damaged by a natural disaster. Instead of paying out-of-pocket for auto accidents, people pay annual premiums to an auto insurance company; the company then pays all or most of the costs associated with an auto accident or other vehicle damage.
Most states require you to have minimum amounts of liability insurance coverage; some also require you to have other coverage types, such as uninsured motorist coverage.
Premiums are what you pay monthly, biannually or yearly to maintain a car insurance policy while deductibles are amounts you pay when you file a claim
Liability Insurance – if you cause a car accident, your liability insurance covers the other driver’s bills for any damage, injuries or even death. Almost every state requires this coverage for all drivers and you’ll need proof of insurance to legally drive a new vehicle.
There are 2 types of liability coverages:
Bodily injury liability – covers the medical expenses from an accident
Property damage liability – covers the repair costs to other vehicles, fences, mailboxes, or buildings from an accident.
Personal Injury Protection (PIP) – is only available in some states. Like medical payments coverage, PIP may help pay for your medical expenses after an accident. In addition, PIP may also help cover other expenses incurred because f your injuries; for example, childcare expenses or lost income.
Comprehensive Coverage – may help cover damage to your car from things like theft, fire, hail, or vandalism. If your car is damaged by a covered peril, comprehensive coverage may help to repair or replace your vehicle (up to the vehicle’s actual cash value). This coverage has a deductible, which is the amount you’ll pay out of pocket before your insurer reimburses you for a covered claim.
Comprehensive is typically an optional coverage, but your lender may require it if you’re leasing or paying off your vehicle.
Collision Coverage – if you’re involved in an accident with another vehicle, or if you hit an object such as a fence, collision coverage may help pay to repair or replace your car (up to its actual cash value and minus your deductible).
Collision coverage is typically optional. It may be required, however, by your vehicle’s leaseholder or lender.
Medical Payments Coverage – If you, your passengers or family members who are driving the insured vehicle are injured in an accident, medical payments coverage may help pay for costs associated with the injuries. Covered costs may include hospital visits, surgery, X-rays and more.
Medical payments coverage is required in some states and optional in others.
Uninsured and Underinsured Motorist Coverage – If you’re hit by a driver who doesn’t have insurance, uninsured motorist coverage may help pay for your medical bills or, in some states, repairs to your vehicle. If you’re hit by an underinsured driver, that means they have car insurance, but their liability limits aren’t enough to cover your resulting medical bills. That’s where underinsured motorist coverage may help, depending on the laws of your state.
Uninsured and underinsured motorists coverage is required in some states and optional in other states.
To determine the types of auto insurance for your needs and purposes, contact us today to schedule a time to review your situation to find the right coverage.
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