In addition to protecting you financially, auto insurance is a social responsibility. Driving without insurance or the ability to pay for the damages you caused in an accident puts others at a financial risk.
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All states except New Hampshire require the owner of the vehicle to demonstrate that he or she has the financial capacity to cover liability costs in the event of an accident, and most require that they have such financial capacity by taking out auto insurance. New Hampshire requires drivers to prove they have financial responsibility after the accident.
An automobile insurance policy contains six major types of coverage. Depending on where you live, some are mandatory and some are optional.
The automobile insurance comprises:
Physical Injury Liability
Liability for property damage
Payment of medical expenses (MedPay) or Personal Injury Protection (PIP).
Shock.
Coverage against all risk.
Coverage against uninsured / underinsured driver (UM / UIM).
Additional, for example assistance on the side of the road.
When people talk about having "full coverage" usually means that they have liability insurance, against collision and against all risk.
We will analyze each type of coverage and help you determine if you need them.
Liability insurance
Liability insurance pays for the damages you caused to others. It is represented in three numbers, for example: 20/40/10 which translates to $ 20,000 in physical injury coverage per person, $ 40,000 in physical accident injury coverage and $ 10,000 in property accident insurance coverage.
If you cause an accident you also pay for your legal expenses.
When the accident was caused by your fault, except in "no fault" states, where your Personal Injury Protection (PIP) coverage would pay for your injuries, the physical injury liability will pay for the other person's medical expenses and the Wages that it has not received.
Liability for property damage pays for repair or replacement of the property you have destroyed. That includes other cars or properties, such as fences.
States have the minimum auto insurance limits that you must hire, but unfortunately you may find them insufficient. If you cause a serious accident, you will quickly exhaust your limits and be responsible for the rest.
If you caused damages in the amount of $ 65,000 and you have a $ 40,000 limit on your insurance, you will be responsible for the remainder of $ 25,000 for which you may be sued.
The liability insurance has no deductibles.
Insurance against all risks and against shocks
Unlike civil liability for property damage, in the event of an accident, collision coverage pays for repairing your own vehicle. The crash claim check will be reduced to the amount of your deductible for shocks.
The loss of your car for total damage will be considered when the cost to repair it exceeds a certain value threshold of the vehicle, such as 70 percent. At that time, the insurance company will tow the car to a destemmer and offer you the current cash value of your vehicle less the deductible.
To keep your premium costs down when hiring collision coverage, you can increase the deductible. The higher your deductible, the lower your premium, but remember that you will be responsible for paying that amount.
All-risk coverage pays for damages to your vehicle for reasons other than automobile accidents. This includes robbery, fire, vandalism, natural disasters and animal crashes (eg colliding with a deer). The damage to your windshield, may also be covered by your coverage against all risk. In some states, all-risk coverage includes glass repair and replacement without a deductible, but varies by state. When you hire a policy, ask your agent about the details.
While no state requires collision or all-risk coverage, your lender (if you are financing a car) may ask you to hire this coverage until you pay for your entire vehicle. After your car is fully paid, you can cancel coverage against all risk and against collisions, although you may want to maintain coverage to protect your own investment in the vehicle.
Medical Expenses and Personal Injury Protection
The medical expense coverage, called MedPay, pays for medical expenses incurred by you and your passengers after an accident. You are also covered for injuries if you are driving another person's car or for injuries you suffered if a car crashed you. MedPay will pay no matter who caused the accident, but if another person is guilty of it, your insurance company may ask the other party to pay the damages.
Personal Injury Protection (PIP) coverage pays you and your injured passengers in an accident for medical expenses and wages you did not receive. It also covers funeral expenses. PIP is required in 16 states.
Do you need PIP or MedPay? If you have good medical coverage and disability insurance, you do not need to have a PIP or you can only buy the minimum amount if it is required.
Depending on your condition, you may be able to purchase only one or two of these types of toppings.
Uninsured / Underinsured Driver Coverage
Uninsured driver (UM) coverage pays your medical bills if an uninsured driver hits your car or if you are a victim of a collision where the driver is fleeing. According to the Insurance Information Institute, UM is required by law in 20 states and also in the District of Columbia: Illinois, Kansas, Maine, Maryland, Massachusetts, Minnesota, Missouri, Nebraska, New Hampshire, New Jersey, New York, Carolina North Dakota, Oregon, South Carolina, South Dakota, Vermont, Virginia, West Virginia, and Wisconsin.
Similarly, underinsured driver (UIM) coverage goes into effect when someone causes an accident but has insufficient insurance to cover all medical expenses. In that case, the guilty person's insurance pays the maximum and then your UIM coverage pays the rest of the bill up to its own limit.
UM and UIM also pay claims for moral damages. In some states you can also take out property damage insurance from an uninsured driver (UMPD) to cover damage to property. For more information read about the benefits of uninsured / underinsured driver coverage.
Additional motor insurance
A variety of extras are available. Just remember that filing a claim for some of them, as in the case of the trailer, will be inscribed as a claim on your record.
Lease repayments pay for the rental of a car when your vehicle was damaged or stolen. Check the daily limits on the amount of money and the overall highs to make sure that you are getting good value for your premium.
Trailer coverage and side-of-road assistance pays for the cost of vehicle damage.
Gap insurance for a new vehicle pays the difference between the current cash value of the vehicle and the remaining loan amount of your car if your vehicle has total damages.
Automotive insurance rates
Automobile insurance companies spend a considerable amount of time and effort deciding how to quote the prices of the policies. Commonly used factors are:
Your adress.
Your driving record.
Your credit (except where state law prohibits the use of credit information to quote insurance).
Your previous claims.
Your vehicle.
Your daily commute to work and / or your annual miles.
Other factors also influence price, such as whether your vehicle will be parked in a garage while you are at home.
Types of High Risk Auto Insurance
A poor driving record can lead to an unpleasant journey for years. It may be that you must have alternative policies until your records improve, such as:
SR-22 and FR-44. The dreaded SR-22 and FR-44 are insurance certificates that serve to demonstrate to your state that you have auto insurance. You may be required to have one if you have had a DUI, received a conviction for reckless driving or discovered driving without insurance. Not all insurance companies provide an SR-22 or FR-44 so you might have to make some calls or research online.
Unconventional policies. If you have accumulated several tickets or had many accidents, it may be that insurance companies will judge you as a "high risk". This means that you will pay considerably more for auto insurance until your automobile accidents and violations are removed from your record. Many insurers sell high risk policies.
Where to buy auto insurance
It is easy to get auto insurance quotes and compare prices from several insurance companies can save you hundreds of dollars. Even when your car registration is not wonderful, comparing prices can save you money.
You can obtain quotes from:
Local insurance agents.
Sites that provide quotes from multiple insurers.
Directly from insurance companies.
Insure.com's annual customer satisfaction survey can help you find the best auto insurance companies.
In addition, many state insurance departments publish annual reports showing the number of consumer claims against each insurance company that conducts business within the state. Look at the website of your state insurance department.
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