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People often compare the lowest price quotes to decide which auto insurance policy to purchase without giving much consideration to what is actually covered by their policy. The lowest quotes can also mean very minimal coverage and an unfortunate surprise in the event of an accident, so it’s a smart idea to seek professional advice from an independent insurance agent to make sure you are properly covered according to your state’s law AND based on your individual needs.

Rarely is the minimum liability amount that is required by your state enough to replace newer cars or to pay for anything beyond minor injuries. Minimum liability is better than no insurance, but just barely. If you are not a homeowner, you own and drive an older model car, you have no assets or savings, and you absolutely cannot afford more, then the state minimum will at least keep you legal.

Based on your state’s requirements, your auto insurance policy may include the following types of coverage.

·         Liability for Property Damage covers the other party’s property if you cause an accident. It does NOT cover damage to your vehicle.

·         Liability for Bodily Injury can cover medical expenses, funeral expenses, pain and suffering, rehabilitative care, or lost income for the other party. Again, this does not cover you.

o   When you see amounts written such as: $25,000/$50,000, this indicates up to $25,000 coverage per person and up to $50,000 coverage per accident if more than one person is hurt.

o   You should also know that the other party can sue you for other assets such as your savings, wages, and even your home if your liability insurance is not sufficient to cover the injuries and related costs incurred in an accident that you cause.

o   Additionally, if you intentionally cause an accident, your liability insurance will not cover the costs.

·         Collision covers the costs to fix or replace your vehicle after an accident where you collide with another vehicle or object such as a pole or a building. While collision coverage is typically required by the finance company if you are still paying on a lease or a loan for your vehicle, many states do not require it.

·         Comprehensive coverage is also optional, unless required by your finance company, and covers damage caused by non-collision incidents such as natural disasters, vandalism, and falling objects. One example is damage caused by a hailstorm.

o   So what’s the main difference?

§  Collision insurance applies to accidents that are “within a driver’s control” whether it’s you who loses control or the other driver.

§  Comprehensive insurance applies to accidents that are outside of a driver’s control, such as a deer running in front of your car, theft, or an “act of nature”.

·         Uninsured/Underinsured insurance covers your costs if your car or you are damaged in an accident that is caused by a driver who does not have insurance, or who does not have adequate coverage.

·         Guaranteed Auto Protection (GAP) insurance covers the difference in what you still owe on your vehicle and your vehicle’s actual cash value in the event of a catastrophic loss, i.e. your car is totaled.

·         Personal Injury Protection (PIP) insurance, also known as “no-fault insurance,” covers medical expenses for the driver, passengers, members of your household, and other drivers listed on your policy – regardless of who is at fault. Several states require drivers to carry PIP; in other states it is optional; and in some states it isn’t available at all.

*All applicable coverages are minus your deductible. An agent with an independent insurance agency, such as CWP Insurance Advisors, Inc., can best advise you on the coverage you should carry to meet your specific needs and to make sure you, your family members, other passengers, and other drivers are adequately covered. 

Posted 9:00 AM  View Comments

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