What Does Car Insurance Cover
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When you drive, you hope that everyone else is going to follow the rules of the road. Unfortunately, sometimes things dont happen that way. In 2018, there were 36,560 traffic deaths and 1,894,000 traffic-related injuries.
If youre going to drive, you need to understand your auto insurance policy and know both what is and what is not covered. Car insurance is perhaps more important than your medical or homeowners insurance because it doesnt just account for you: it covers other people and other peoples property as well. Without enough insurance, its possible you could put yourself in financial jeopardy.
Learn what car insurance covers and how to see the limits of your policy to make sure youre protected financially on the road.
Supplemental Information To Qualify For Insurance Discounts
If youd like to qualify for discounts, ask your insurance provider which ones it offers. You may need to show proof that you are eligible, like:
- Proof of good grades with a recent report card
- Military I.D. card
- Proof of being a homeowner
- Proof of membership to a qualifying organization
- Completion certificate for a safe driving course or defensive driving course
How Much Car Insurance Do You Need
Your auto insurance is a collection of different policies that cover you in different ways. Heres how they break down:
Liability coverage ” These policies help cover liability and expenses when youre at fault in and accident. The money will go to the people you hit, but it wont cover the people in your car.
Bodily Injury Liability ” This policy pays for the medical expenses of people injured in a crash in which you’re at fault. Youll often see BIL policies described as a 20/50 policy or a 100/300 policy. These numbers describe the maximum dollar amount the policy will pay for a single persons injuries and the maximum for all the injuries sustained by all the occupants of the other car. For example, a 20/50 policy will pay a maximum of $20,000 for a single persons injuries, and up to $50,000 total for the injuries of everyone in the car you hit.
Property Damage Liability ” This policy pays for damage done to the other car if you’re at fault in an accident. Property liability is sometimes referred to alongside BIL as a third number, so a 20/50/10 liability package will cover up to $10,000 for damages to the other car.
The following policies cover you and your card in an accident:Personal Injury Protection ” This covers your and your passengers medical expenses after an accident. If you lose time at work because of your injuries, this policy may also cover lost wages.
How To Choose What Auto Insurance Coverage Levels You Need
Choosing the right auto insurance coverage levels is important not only to keep you legal on the road, but to keep your personal assets protected in the event of an accident. This guide will help you balance cost with coverage.
First, its important to understand three of the key components of an auto insurance policy:
- Bodily Injury Liability Per Person: Coverage limit, per person, for the expenses, like medical bills and lost wages, due to injuries you cause to others in an accident.
- Bodily Injury Liability Per Accident: Coverage limit for the expenses due to injuries you cause to others, in total for the accident.
- Property Damage Liability Per Accident: Coverage limit for damages you cause to other peoples property in an accident, which could include cars, fences, etc.
When you compare coverages, policies will often be written like this: 25/50/25.
Which means your liability coverage is:
New Hampshire and Virginia do not require car insurance coverage.
Protect Your Wallet With Sufficient Liability Coverage
The main component of car insurance liability coverage doesnt pay you if you cause a crash. Instead, it pays for injuries, deaths and property damage you cause, up to your policys limits. Liability limits are often listed in a format such as 25/50/15, which means your insurer will pay $25,000 per person and $50,000 per wreck for injuries youre responsible for, and up to $15,000 for property damage you cause.
In states where its required, minimum bodily injury limits can be as low as $15,000, but a bad wreck can easily result in medical bills higher than that. The average cost of a crash resulting in non-disabling injuries was more than $28,000 in 2019, according to the National Safety Council. And if youre sued with insufficient liability coverage, youll pay the rest out of pocket.
So how do you know when youve bought enough? TJ Roberts, a Farm Bureau insurance agency owner in Mission, Kansas, recommends you consider your net worth and how much you drive when determining your auto policys liability limits. Roberts stresses that the most important thing about car insurance is having the proper coverage limits for your financial situation.
To determine your net worth, add up all of your assets, including investment and retirement accounts, and subtract any debt you owe. Then make sure you have enough bodily injury liability coverage to cover that amount.
Shop Around For The Lowest Insurance Premiums
Your premiums will vary from one insurance company to another. It’s important to shop around, ask for quotes, and compare prices before deciding on one insurance company. In some cases, you may be eligible for a discount by combining your home and car insurance.
When shopping for a car, check the insurance rating for the car you’re thinking of buying. Insurance companies assign ratings based on the claims made on different makes and models. Cars with better ratings are cheaper to insure. You can get rating information from:
- your insurance company, broker or agent
In most provinces and territories, an insurance company can charge higher premiums based on your credit rating.
More Insurance: Surprisingly Affordable
Adding additional coverage to your policy is more affordable than you think. And the blunt truth is that almost nobody can afford to have only minimum insurance coverage because all it takes is a single accident to put you in serious debt.
And if youre still worried about the cost, the best way to save on your insurance is to switch carriers. Why not choose a company that offers more coverage for better prices and enjoy the best of both worlds?
Combined Single Limit Liability
An alternative to split limit liability coverage is one larger liability limit to cover both bodily injury and property damage. The flexibility of combined single limit liability means more financial protection than split limit coverage in many cases.
For example, lets compare the split liability limit above with a combined single limit of $60,000. Say you injured two people in an accident, and one required $10,000 worth of treatment while the other required $50,000. Under the split liability limit, youd have to pay $20,000 for the second persons injuries because their treatment exceeded your policys per-person maximum. But with a combined $60,000 liability limit, all treatment would be covered.
Combined single limit liability may cost more than split limits.
What Types Of Car Insurance Do I Need
At the very least, you must buy your states minimum car insurance requirements. But state minimums are woefully inadequate and wont provide any coverage for your own cars repair bills. If you want better coverage, youre going to need to buy more than the minimum requirements.
There are several coverage types to choose from. With a basic knowledge of the main types of car insurance, you can put together a good policy that fits your specific insurance needs.
Optional Car Insurance Coverage Types
Liability insurance, uninsured motorist coverage, medical payments, and collision and comprehensive insurance are a good foundation for a car insurance policy. But you might need a few additional coverage types to fill in some gaps. Here are some to consider.
- Gap insurance. If your car is totaled due to a problem covered by your policy, such as a car accident or fire, gap insurance covers the difference between the actual cash value of your car and how much you owe on the loan or leases. For example, if you have $15,000 outstanding on your loan but your cars value was $13,000, this coverage pays the $2,000 gap.
- Rental reimbursement insurance. If your car is being repaired due to a problem covered by your policy, this coverage pays for a rental car or substitute transportation, such as train and bus fare, during repairs.
- Roadside assistance insurance. If your car breaks down or you run into another problem , this pays for service like a tow truck, jump-start, fuel delivery or a locksmith.
If I Am Injured In An Accident Does My Health Insurance Pay Anything
Usually, your health insurance pays for your immediate medical care. Then your health insurance company will typically try to get back money from your auto insurance or the other person’s auto insurance.
When one insurance company tries to get money back from another insurance company, it is called subrogation.
Worksheet For The Low Cost Auto Insurance Program
Use this worksheet to write down the costs of your auto insurance from the Low Cost Automobile Insurance Program .
|The liability coverage that you must buy in a CLCA policy:|
|With a CLCA policy you can also buy additional coverage. For an extra charge, you can buy:|
Summary Of Typical Car Insurance Coverage Types
- Bodily Injury Liability: Liability insurance protects you by paying for another drivers medical bills in an accident where you were at fault. Each state has its own minimum liability requirements, but its a good decision for you to have at least $100,000 per person and $300,000 per accident in bodily injury liability coverage.
- Property Damage Liability: Liability insurance also pays for damage to another persons property if you are at fault in an accident. Each state has its own minimum liability requirements, but you may want to have a minimum of $100,000 in property damage liability coverage.
- Collision: Collision insurance pays for damages to your vehicle when you are at fault in an accident. If you have a loan on your car, your lender may require active collision insurance on your policy.
- Comprehensive: Comprehensive insurance covers damage to your car that isnt a result of an accident. Hail damage, theft and fire damage are just a few examples of what would be under this comprehensive insurance coverage.
Settling A Claim If You Have A Car Loan
If you have a car loan, your car insurance policy will usually include a loss payee clause. A loss payee clause makes your lender your beneficiary. In case of loss or damage to your car, your insurance company will pay your lender up to the remaining balance of your car loan when you make a claim.
When you make a claim, your insurance company may, at its discretion, give the money to either:
- you, so you can fix your car when you submit a claim
- your lender, who would then give you the money for repairs after you submit receipts proving they were done
How Much Liability Insurance Do I Need
You need to have at least enough liability insurance to meet your states minimum requirements. Liability insurance covers the other drivers property damage or injuries if you cause an accident, and its required in almost every state. For example, Texas requires liability insurance limits of 30/60/25or up to $30,000 for one persons injuries, $60,000 for all injured parties in an accident, and $25,000 for property damage.
Although you can legally drive with just your states minimum coverage, you should consider purchasing higher limits if you can afford to. Its generally recommended that you purchase enough liability insurance to cover the value of your assets. For example, if your assets are worth $185,000 in total, a 100/200/50 liability policy could be a good fit.
If you cause an accident, your liability insurance will only cover expenses up to your coverage limits, and you will be responsible for everything else. If the other driver sues, your assets could be seized or your wages garnished in order to cover the remaining balance. So, having enough liability insurance to cover your assets can protect you in the long run. Those who have a particularly high net worth should also consider purchasing an umbrella insurance policy, which can increase liability insurance limits up to $5 million, depending on the insurer.
Uninsured Motorist/underinsured Motorist Coverage
Uninsured/underinsured motorist coverage covers you if youâre in an accident caused by a driver who either doesnât have insurance, or whose insurance canât pay for the full extent of the damage they caused. Some states require drivers to carry a minimum amount of uninsured/underinsured motorist coverage.
â Learn more about uninsured/underinsured motorist coverage
When You Get Your New Policy Review It
Make sure the information is correct and the coverage is what you bought. Contact the company right away if you find an error. Send changes to your agent, broker, and/or insurance company in writing and keep a copy. Do not be afraid to contact the insurance company directly to make sure that your agent or broker has requested the coverage you wanted. Use “certified mail/return receipt requested” to make sure that your letter was received.
Do You Need Medical Payments Coverage
It depends mostly on your other insurance coverages.
is coverage that specifically covers any medical expenses you and your passengers have after an accident, regardless of whose fault the accident was. This is useful because it is coverage that kicks in right away while your insurance companies work things out, and usually has a lower limit around $1,000 to $5,000. It can help pay for health insurance deductibles and even your PIP co-pay. Unlike PIP, however, MedPay will not cover the replacement of any lost wages.
It is possible that your health insurance may not cover costs related to a car accident, and in that case MedPay would be very valuable protection. Even if your insurance will kick in, MedPay may also be worthwhile if you have a relatively high deductible.
Talk To The Department Of Insurance
We are the state agency that regulates the insurance industry. We also work to protect the rights of insurance consumers.
Contact the California Department of Insurance :
- If you feel that an insurance agent, broker, or company has treated you unfairly.
- If you have questions or concerns about insurance.
- If you want to order CDI brochures.
- If you want to file a request for assistance against your agent, broker, or insurance company.
- If you are having difficulty opening a claim with your insurance company.
- To check the license of an agent, broker, or insurance company.
How To Get Salvage Or Rebuilt Title Insurance
The process of insuring a car with a salvage or rebuilt title is often more challenging than covering a vehicle with a clean title. Taking the following steps can help simplify the process.
Secure a rebuilt title.
Remember that you cant get insurance for a salvage title car, but you can insure a vehicle with a rebuilt title. However, if the damage is extensive, your insurance company may declare your vehicle as non-repairable, in which case youll only be able to use it for parts.
Get a certified mechanics statement.
Its crucial to have a secondary inspection performed by a certified mechanic before attempting to insure a rebuilt car. This measure ensures that any significant unaddressed issues from the restoration process are identified early. Most insurance companies will also require a second opinion before deeming your car roadworthy.
Figure out coverage options available to you.
You may find fewer options when purchasing insurance for a car with a rebuilt title. Some carriers flat out refuse to cover these types of vehicles, so its good to know which car insurance companies insure salvage or rebuilt titles. Since it is difficult to determine whether damages were caused by a recent incident or already existed, some carriers are hesitant to offer full coverage insurance to cars with rebuilt titles. Certain providers also charge more, resulting in a premium that costs up to 20% higher.
Always compare quotes.
Does Blaze Pizza Provide Commercial Coverage
You will not be able to find affordable Blaze Pizza auto insurance quotes as there are very few delivery companies that provide their drivers with coverage.
Blaze Pizza is no exception, so you need to inform your insurer that you intend to use your vehicle for business purposes.
After doing so, you can add a commercial policy to your pre-existing personal policy. Lets compare the rates offered by Progressive for business and personal policies.
Progressive Personal and Commercial Auto Insurance Rates
|Type of Food Delivery|
As you can see, using your vehicle for food delivery more than doubles the rate for a personal insurance policy.
Lets wrap up by seeing what happens if you fail to procure proper coverage.
Mandatory Car Insurance Coverage
When braving traffic on the busy highways in Toronto, or getting caught in the cottage country rush, make sure you have the right coverage. Here is the mandatory minimum you need:
- Liability Coverage: If you injure someone or damage property, payments are made on your behalf.
- Direct Compensation: Damages to your car are covered if you’re not at fault.
- Uninsured Automobile Coverage: Medical costs and damage are covered if an uninsured driver is at fault.
- Accident Benefits Coverage: Regardless of who is at fault, medical and other expenses you are entitled to receive are covered.
Information About Your Driving History
Next, youll answer questions about your driving history. The auto insurance company will need to know about recent tickets or citations, accidents, and any information about license suspension.
Insurance companies mostly ask for a history of three to five years, but this time frame will vary by state and provider.
How Should You Save Money On Car Insurance
In order of impact and potential savings, we suggest the following steps for drivers trying to save money on their car insurance bills:
- Shop around. You will see that the rates major insurers charge the same driver in the same car can vary by hundreds, sometimes thousands, of dollars. See how much average car insurance rates can differ in your neighborhood by entering your ZIP code into our comparison tool.
What Optional Car Insurance Coverage Is Available
- Collision Insurance
Collision insurance covers damage to your vehicle after an accident. Like liability coverage, it has policy limits. Collision insurance also comes with a deductible, which is the amount you have to pay out of pocket before insurance pays the rest of the bill. You get to pick your deductible, but lower ones come with higher premiums.
- Comprehensive Insurance
If your car is damaged by something other than a collision, youll need comprehensive coverage for a claim. This includes damage caused by vandalism, theft, weather, and wildlife. Like collision insurance, youll have to choose a deductible.
- Guaranteed Auto/Asset Protection
Cars depreciate quickly, and you could easily end up owing more on your loan than the vehicle is worth if your car is totaled. Gap insurance bridges that gap and pays the difference if your car is a total loss.
- Emergency Roadside Assistance
Emergency roadside assistance is a coverage option that provides assistance if you lock yourself out of your car, need a tow or jump start, get a flat tire or run out of gas. If your car is inoperable, you can get a tow to a nearby garage of your choice, up to a specified distance.
- Mechanical Breakdown Insurance
- Windshield Insurance / Full Glass Coverage
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Does It Ever Make Sense To Have Liability
There are some instances where only carrying liability coverage makes sense. If your car doesnt have much in the way of cash value, it might not be worth it to carry comprehensive or collision coverage. Drivers who can afford to replace their car out-of-pocket may not want to spend the extra money on full coverage car insurance.
Commonly referred to as the 10% rule, if your annual cost for full coverage would be more than 10% of the vehicles actual cash value, you can drop your comprehensive and collision coverage.
How To Get The Lowest Full Coverage Insurance
Full coverage auto insurance will cost you more because you are purchasing more coverage than minimum coverage. There are some steps you can take to help you find the right policy for you.
- Compare quotes:Comparing quotes from different companies for the same coverage might help you to find the right coverage at a lower price.
- Get discountsMany insurance companies offer discounts that can help you save money. Your premium will be lower if you take advantage of the discounts that you are eligible for.
- Drive safely:You will pay a higher premium if you have DUI convictions, tickets, or accidents on your record. A clean driving record can lower your premium.
- Your deductible should be increasedComprehensive and collision coverage both come with a minimum deductible. This is the amount you agree to pay for any claim. Your premium can be reduced by increasing one or both your deductibles, but the deductible for collision coverage is usually the most significant. Be sure to select a level you can afford to pay in the event of a claim.
While price is an important aspect when purchasing car insurance, its not the only thing to think about. It is important to consider customer service ratings, financial strength scores and available coverages.
What If I Owe More On My Car Than What Its Value Is
Its possible to get into an accident that totals a car youre still making payments for but not get enough from your insurance provider to settle your debt. In fact, it happens all the time from both accidents and theft. People often have to make payments on a car that was stolen from them.
This is because your provider is paying you for the actual cash value. Also known as ACV, its the current value of your car minus whatever deductible you have.
To safeguard yourself against this, consider purchasing either gap insurance or new car replacement coverage.
- Gap insurance pays off the gap between your ACV and the amount you still have left on your loan or lease.
- New car replacement can be used if youre the first owner of a car or if your car is less than one to two years old. It guarantees that you will be paid more than the ACV of your totaled car and be given enough to replace it with a car of the same value.
These additional coverages can give you extra peace of mind.
What Liability Auto Insurance Doesnt Cover
Liability auto insurance wont pay for your own medical bills or repairs to your car its only designed to pay others for the damage you cause behind the wheel.
To cover your own bills, youll need to rely on other types of insurance, such as health insurance for your medical expenses and collision insurance for repairs to your vehicle. If you want more protection, consider buying full coverage car insurance. Full coverage isn’t a specific type of policy, but refers to a combination of coverage types including liability insurance and comprehensive and collision coverage.