It helps to know about the basics of auto insurance. Many people don’t know and it costs. Picking auto insurance that fits your needs and the needs of your family is important, so here we’ll give you the basics. Many people shop on price alone and lose site of the purpose of auto insurance. What’s the point of buying a cheap policy for a good price if it doesn’t provide you with the coverage you may need?
Here you’ll find information about car insurance and answers to some common questions. If after reviewing this material, you still have questions, call one of the insurance specialists. They’re here to help you and won’t pressure you – they’ll just help you.
- What is auto insurance?
Auto insurance is meant to cover you if you cause injuries to others or damage their property in an auto accident. It also provides protection if your vehicle is damaged in an accident or is stolen. What protection you have is spelled out in your auto insurance policy.
An auto insurance policy is a contract between you and an insurance company. You, the customer, pay a certain price (“premium”) to the insurance carrier in exchange for a set of coverages you select. Your policy describes what the insurance provider will or will not cover.
- What does auto insurance cover?
At a high level, auto insurance typically provides four basic things—liability coverages (for injuries to others and damage to their property), coverage for damage to your car or cars, coverage for medical expenses and uninsured motorist coverages (for situations where someone without enough insurance injures you or a family member). There are a variety of coverage options available; they may vary by state and company.
- What are the common auto insurance coverages?
Bodily injury liability coverage generally pays damages for bodily injuries to the driver and passengers of the other vehicle when you are responsible for an accident. It also provides coverage to defend you if you are sued because of an auto accident.
Property damage liability coverage generally pays for damages to another person’s property (e.g. their car) when you are responsible for an accident. It also provides coverage to defend you if you are sued because of an auto accident.
Medical payments coverage generally covers you, household relatives and your passengers for medical expenses that result from injuries sustained in an auto accident. It also covers you as a pedestrian if you are hit by a vehicle.
Some states have personal injury protection (PIP) in place of, or in addition to, medical payments coverage. This is also known as no-fault coverage. PIP can generally pay for medical expenses, funeral expenses, loss of income and other expenses for injuries or death due to bodily injury sustained as the result of a car accident.
Uninsured or underinsured motorist bodily injury coverage generally pays for damages for bodily injury to you and your passengers when caused by another in an auto accident and the person legally responsible either has inadequate or no insurance. This coverage varies greatly by state. In some states it may be a combined coverage, while other states may offer it as two separate coverages (e.g. one for uninsured motorists and one for underinsured motorists).
Collision coverage generally pays for damage to your car if it hits another car, object, or overturns. A deductible applies to this coverage.
Comprehensive coverage generally pays for damage to your car if it is stolen or damaged by certain causes other than collision, such as fire, theft, hail or vandalism. A deductible applies to this coverage.
- What should I consider when purchasing auto insurance?
- When purchasing auto insurance, make sure you find coverage that fits your needs. Think about you and your family’s specific circumstances, including your risk tolerance and your budget. If you aren’t sure what type of things you should consider, read below. Or, get help by working with an insurance agent which is what we recommend as it doesn’t cost any more to have a pro on your side and will likely help you save.
Local agents likely know which companies offer discounts or savings incentives. An experienced agent will know how to get you the best coverage at the lowest cost. Sometimes it actually cost less when you have better coverage with higher liability limits as it places you into different rating tiers and helps your insurance score.
When you shop online and purchase without an agent – you become your own agent and if you make a mistake like not adding glass coverage or some other more important coverage it won’t be covered. If an agent makes a mistake they have E&O insurance. The insurance company is the only one to benefit by you acting as your own agent.
You could also check out the blog as it has many articles on savings and tips. Below are a few simple questions to help you start evaluating your needs.
- What is your household salary? What are my assets? How much in savings and equity do I have? How much are you willing to risk and insure? Essentially, the higher your salary and net worth, the more you stand to lose if you are ever found liable for an accident. The more attractive to attorneys you become. The more assets you have, the more coverage you might want to consider.
- How old is my car and how much is it worth? Do I own my car outright or is it leased or financed? The model year and original cost of your car helps determine the approximate value of your car today. If the value of the car is low and you own it outright (i.e. no loan or lease), you may want to think about whether you really want comprehensive or collision coverages. On the other hand, if you lease or finance your car, your lender or car dealership probably requires comprehensive and/or collision coverage.
- How much am I willing to pay out-of-pocket? Deductibles are applicable to certain coverages, such as comprehensive and collision coverages. In the event of a loss, a deductible is the amount that you must pay out-of-pocket before your insurance kicks in. A higher deductible could lower your premium.
- Do I have health insurance? Auto insurance can include medical payments coverage for you and your passengers. If you don’t have your own health insurance, you should consider purchasing some type of medical payments coverage on your policy.
- Do I have children of driving age? Children are generally more inexperienced drivers and can present a greater risk on the road. If you have children of driving age, you might want to consider purchasing higher limits of liability coverage.
Friendly local agents are here to help you get bigger savings, better coverage, and provide you with the best service.
Call the Minneapolis Auto Insurance Specialists Team 612-460-7796.