MANDATORY COVERAGE

Nearly every state requires car owners to carry the following auto liability coverage:

  • Bodily Injury Liability — This covers costs associated with injuries and death that you or another driver causes while driving your car
  • Property Damage Liability — This coverage will reimburse others for damage that you or another driver operating your car causes to another vehicle or other property, such as a fence, building or utility pole

FREQUENTLY REQUIRED COVERAGE:

Many states require that you carry the following coverage:

  • Medical Payments or Personal Injury Protection (PIP) — Provides reimbursement for medical expenses for injuries to you or your passengers. It will also cover lost wages and other related expenses
  • Uninsured Motorist Coverage — Reimburses you when an accident is caused by an uninsured motorist—or in the case of a hit-and-run. You can also purchase under insured motorist coverage, which will cover costs when another driver lacks adequate coverage to pay the costs of a serious accident

OPTIONAL COVERAGE:

While basic, legally mandated auto insurance covers the cost of damages to other vehicles that you cause while driving, it does not cover damage to your own car. To cover this, you need to purchase the following optional auto insurance coverages:

  • Collision — This optional coverage reimburses you for damage to your car that occurs because of a collision with another vehicle or other object—e.g., a tree or guardrail—when you’re at fault. While collision coverage will not reimburse you for mechanical failure or normal wear-and-tear on your car, it will cover damage from potholes or from rolling your car
  • Comprehensive — This provides coverage against theft and damage caused by an incident other than a collision, such as fire, flood, vandalism, hail, falling rocks or trees and other hazards—even getting hit by an asteroid!
  • Glass Coverage — Windshield damage is common, and some auto policies include no-deductible glass coverage, which also includes side windows, rear windows, and glass sunroofs. Or you can buy supplemental glass coverage

Even if these types of coverage are optional in your state, consider adding them to your policy for greater financial protection.

GAP INSURANCE

If you lease or finance your vehicle, auto dealers or lenders will likely require you to purchase collision and comprehensive. But keep in mind that collision and comprehensive only cover the market value of your car, not what you paid for it—and new cars depreciate quickly. If your car is totaled or stolen, there may be a “gap” between what you owe on the vehicle and your insurance coverage. To cover this, you may want to investigate purchasing gap insurance to pay the difference. (Note: For leased vehicles, gap coverage is usually rolled into your lease payments.)

COMMON AUTO INSURANCE RATING VARIABLES

Age — insurance companies use your age in their overall rating algorithms. Drivers who are under 25, and over 65 typically don’t get preferred rates because statistics show that those two age demographics have the most loss frequency and are therefore more at risk for financial loss due to an auto accident.

Credit — credit is a metric that has been used in insurance scoring for many years. The better your credit, the more favorable your rates will usually be.

Car — the type of car, engine size, safety features, etc. are all part of determining the rate.

Driving History — your driving record and loss history plays a substantial role in the price. If you have a spotty driving history, or multiple moving violations or accidents, chances are, you will not get a preferred rate until those things are at least 3 years old.

Household — insurance companies underwrite at the household level, meaning they try to judge based on the entire household, what the probability of loss will be. If there are multiple drivers in the house who are under the age of 25, that will impact everyone’s pricing in the household.

To get started reach out to discuss your needs.  In most cases all we will need is a copy of your driver’s license and a copy of your current insurance declaration page.  Drive safely!

Not sure what you need? Let us help you eliminate the guess work to make sure your life’s work is protected from the unexpected.

  • We can review your current plan or policies to insure they still meet your goals.
  • Let us provide a no cost insurance policy and/or plan review to make sure your life’s work is protected from the unexpected.
  • We can review any life changing events like weddings, death, college, divorce, new family additions, promotions, or home purchase.