If you drive an automobile, you’ll be required to have auto insurance. There are basic coverage’s that you will be required to carry per your state law, and there are additional coverage’s you can add on. In this guide we’ll walk through what basic coverage’s you’re required to have and the optional coverage’s you can add.
Required Coverage – (Liability Coverage)
Each state has a different requirement for how much liability insurance should be carried, but just because you may carry state required liability limits, it still may not be enough coverage.
Bodily injury done to others in and of itself could reach tens of thousands of dollars, so it is always suggested to carry higher limits of liability since the cost of liability insurance is very cheap.
[expand title=”Liability Coverage”]
Bodily Injury to Others
If you become legally obligated to pay for the bodily injury done to another driver that you accidentally hit, you would be indemnified (compensated) by your insurance provide. This could include;
- Medical Treatment
- Ambulance Ride
- Physical Therapy and more[/expand]
[expand title=”Property Damage”]
If you become obligated to pay for the property damage to others property due to an accident that you caused, you would be indemnified by your insurance provider. This could include things like;
- Light pole
- Telephone pole and other various property[/expand]
How much liability coverage should you have?
[expand title=”Required amount (can vary state-to-state)”]
$25,000 of bodily injury coverage per person
$50,000 of bodily injury coverage per accident
$25,000 of property damage done to others, per accident[/expand]
[expand title=”Basic Amount”]
$50,000 of bodily injury coverage per person
$100,000 of bodily injury coverage per accident
$50,000 of property damage done to others, per accident[/expand]
[expand title=”Standard amount (most common)”]
$100,000 of bodily injury coverage per person
$300,000 of bodily injury coverage per accident
$100,000 of property damage done to others, per accident[/expand]
[expand title=”Enhanced amount (suggested)”]
$250,000 of bodily injury coverage per person
$500,000 of bodily injury coverage per accident
$250,000 of property damage done to others, per accident[/expand]
Optional Coverage – (Full Coverage)
Full coverage is extra insurance you can purchase for your vehicle if you would be responsible for causing damage to your vehicle or if you want to get your vehicle repaired or replaced after a covered act of nature causes damages to your car.
[expand title=”Comprehensive Coverage”]
Comprehensive coverage will pay out for damage done to your own vehicle for situations other than a direct collision. The exception to this would be impact with a bird or animal by your insured vehicle. Impact with a bird or animal would be considered a comprehensive loss, no matter how it happened, whether a bird or animal falls on your car, runs into your car or is run into by your car. Other examples of comprehensive losses can include:
- Hail damage
- Theft of vehicle
- Falling tree limb[/expand]
[expand title=”Collision Coverage”]
Collision coverage will pay out for damage done to your own vehicle because of impact with another vehicle or object. This is physical damage done to your car because of you being at fault or responsible for the damage done. Examples of collision coverage can include:
- Impact with another vehicle
- Impact with the road
- Impact with an inanimate object[/expand]
What is a deductible and how does it apply to my auto policy?
A deductible is an amount of money that is owed before an insurance company will pay out for a loss. The amount that is owed at the time of the claim is chosen at the purchase of the policy. Deductibles will usually range from $500 to $1000.
The deductible amount that you choose will indicate how much risk you’re willing to retain. All insurance is, is transfer of risk. What you choose for your deductible amount should coincide with how much money you have set aside for certain losses or events.
For instance, if you choose a $500 collision deductible, that means that if you run your vehicle into another vehicle and want the insurance company to pay for the damage done to your vehicle, you will pay the first $500 and the insurance company will pay the rest. If you choose a $1000 deductible, then you’ll elect to pay the first $1000 and the insurance company would pay the rest.
What should you choose for your deductible
It depends on how much money you want to spend if/when you elect to use your insurance for the physical damage done to your car. if you want to pay a smaller deductible because you don’t have a lot of money set aside for a rainy day, then you will end up having a larger premium, meaning that you’ll have to pay more for your insurance policy since you are retaining less of the risk and transferring more of it to the insurance company.
How To Read Your Insurance Policy
When you look at an insurance policy you will see numbers that read something like this; 100/300/100.
Those numbers represent thousands and tell how much liability coverage you have on your policy.
[expand title=”Bodily Injury“]The first number, 100 = $100,000 worth of bodily injury coverage applied per person that you’re responsible for. That means your policy will pay out up to $100,000 per person for their medical treatment, surgery, ambulance ride physical therapy and anything else that might be applied to their medical expenses.[/expand]
[expand title=”Bodily Injury“]The second number, 300 = $300,000 worth of bodily injury coverage that would be applied in total for the accident that you’re at fault in. Where as the 100 is per person, the 300 if per accident, total coverage.[/expand]
[expand title=”Property Damage”]The third number, 100 = $100,000 worth of property damage that would be paid out on your behalf if you’re at fault for causing property damage to others property. In total, your policy would pay out $100,000 per occurrence for others property that you damage if you’re at fault in the accident.[/expand]
Extra Coverage’s (Optional)
On your typical auto policy, you can opt to have other coverage’s or add-on’s which would enhance your policy in certain ways. Most car insurance policies allow you to tailor your policy in a way which suits you and your needs. What many folks think is standard coverage or automatically included on an insurance policy are often only included by making a change to the basic policy.
Some of the most common add-on’s for your policy are:
[expand title=”Rental Car Reimbursement“]
If your car is in the shop being repaired after a covered loss on your insurance policy, your insurer would pay for your rental car while you need it to drive around to and from work/school or other.
Coverage for rental car reimbursement is chosen on a per day basis, up to a certain amount. Usually what you’ll see for rental car reimbursement is read like: 30/900. Which would mean that the insurance company would pay up to $30 a day up to $900 total for your rental car.[/expand]
[expand title=”Roadside Assistance“]
If you’re in need of a jump start, you lock your keys in your car, get a flat tire or have another type of loss covered by your roadside assistance, your insurance company would pay for those financial losses you experience.[/expand]
[expand title=”Glass Coverage“]
If you experience a glass-only loss to your vehicle perhaps by a rock getting kicked up from the car in front of you, your insurance company would waive your deductible or reduce it to something much less than what your normal deductible would be. If you have comprehensive deductible or collision deductible of $500, you would NOT have to pay that amount for a glass-only loss to your vehicle.[/expand]
[expand title=”Diminishing Deductible“]
Depending on your insurance company, the amount to which your deductible would diminish and the circumstance to which it would diminish, could vary. For instance, with some insurance companies, if you go claims-free for a policy period (6 or 12 months) you would see a reduction in the deductible you would have to pay for a claim.[/expand]
*other coverages may exist, depending on the insurance provider*
Auto insurance discounts may be applied in certain situations which would help reduce your original premium. Different insurance companies offer different discounts and not every insurance company will apply the same discount amounts for their discounts.
Some common discounts are:
[expand title=”Multi Policy Discount”]
Often, when you have more than one policy with the same insurance company, you will receive a multi policy discount. The amount you’ll receive can vary but may be 4% – 11% depending on other factors.[/expand]
[expand title=”Multi Car Discount”]
Many insurance companies will offer a discount if you have more than one vehicle insured on the same policy. You might see a range between 12% and 26% for this discount.[/expand]
[expand title=”Early/Advanced Quote Discount”]
For quoting in advance of when you’re needing to start a policy will allow proper underwriting and show a certain amount of maturity to the insurance company. Typically, a policy quoted at least 8 days in advance of when it needs to start, you’ll see somewhere 5% and 9% discount.[/expand]
[expand title=”Paid In full discount”]
Most every insurance company provides insurers payment options for the policy. It can often be expensive to pay for a policy up front in it’s entirety but for those that can, will receive a discount for being able to do so. You might see somewhere between a 15% to 25% discount, again depending on the insurance company.[/expand]
[expand title=”Defensive driver/ Accident prevention course discount”]
For remaining accident free and completing a course approved by the transportation department, most companies will offer a discount. The discount may be up to 2% for completion of the course and remaining accident free.[/expand]
[expand title=”Homeowner’s Discount”]
For being a homeowner, you can usually receive a discount, not necessary even having both policies with the same company. Most companies prefer their insureds to own a home because it usually will indicate a “safer risk” to take on. Meaning that homeowner’s typically file less claims and are more responsible insured’s. The typical amount for a homeowner discount may be 5% to 19% off your car insurance policy.[/expand]
[expand title=”Continuous Insurance Discount”]
One of the biggest factors that can negatively affect your insurance premium is not carrying continuous insurance or letting a lapse occur. By keeping continuous insurance and not having any lapses (or potential areas where you could have sustained a loss while not being insured) the insurance company will offer a discount sometimes up to 15%.[/expand]
[expand title=”Length Of Residency”]
The longer you live at a place, the more favorable you are in the eyes of insurance companies. If there are two people, one who moves every year and another that has been living in the same place for 5 years, insurance for the one who’s resided in the same place will often be more favorable. Length of residency discounts can vary between 6% an 8%.[/expand]
[expand title=”Paperless Discount”]
Many insurance companies are finding a great way to reduce costs, by offering paperless options for their insureds. As you can imagine there is a large amount of paperwork that’s associated with just one insured, and by not having to send out an enormous amount of paper every year for renewal or policy change, the insurance companies can pass that back on to the insureds. The discount may be around 1% of the total policy premium.[/expand]
*other discounts exist beyond those listed, not all insurance companies offer the same discount amounts*
“I called Kim after the premiums on our homeowners and motorcycle policies increased. She promptly did some research and was able to reduce the homeowners $125 and the motorcycle 50%! Thanks Kim! Dan & Erika H.” • Daniel H., Customer since 2008