Vehicle insurance is for your financial protection when you meet with an unforeseen accident with your vehicle. In some states, Auto insurance is mandatory to drive legally. There is also required minimum coverage limits set by state law. If you have an auto loan then you may require full coverage means all three types of insurance that is liability, comprehensive, and collision.
Insurance companies pay for any financial liabilities/loss occurred, depending on the type of coverage you have.
Insure evaluates the risk associated with each applicant, cost of insurance is high if insure believes risk is high for the driver and low cost of insurance when risk is low.
There are three types of auto insurance
- Liability: it is required by law
- Comprehensive
- Collision
Liability insurance
It is mandatory to have liability insurance, you get a ticket if you are unable to show proof of insurance. when you are at fault for an accident, liability insurance pays for damages and injuries to others and, not yours.
It covers bodily injury liability and property damage liability.
Bodily injury pays for death or injury of others and property damage pays for damage to other’s car or the object you hit.
What if an accident cost more than my liability insurance?
You are responsible to pay what is beyond the insurance liability limits. It is advisable to optimize the liability limit to avoid unwanted lawsuits.
Uninsured Motorist Coverage (UM)/Underinsured Motorist Coverage (UIM)
Kicks in when you are in an accident and other drivers do not have insurance or underinsured.
Uninsured Motorist Bodily Injury (UMBI)
This insurance starts when uninsured driver is at fault, it pays for injuries to you and person in your car. Limits can be same or lower than your liability insurance.
Underinsured Motorist (UIM)
Pays limited cost when other driver has insufficient insurance.
Uninsured Motorist Property Damage (UMPD)
Pays for damages to your car when uninsured driver is at fault, and you don’t have collision insurance provided it pays only if uninsured driver is identified.
Collision Deductible Wavier (CDW)
Applicable when your vehicle is damaged and other uninsured driver is at fault.
Medical Payment Coverage
Pays medical care expenses to you and your passengers when you or other driver is at fault. It also pays while riding in other’s car, while you are walking or biking.
Personal injury protection (PIP)| No-fault Insurance
It is similar to medical payments coverage. This coverage pays medical bills of you and your passengers. It also pays for non-medical loss like wages loss due to an accident. Deductible is applicable
Comprehensive and collision/Physical Damage Coverage
1. Collision insurance Covers: Pays for damage to your vehicle by collision to other vehicle, tree, rock, or any other object.
2. Comprehensive insurance covers: only damage to your vehicle other than collision for example fire, vandalism, flood etc. It does not cover mechanical breakdown and maintenance.
Guaranteed Auto Protection (GAP) insurance
Market value of new vehicle depreciates very quickly. Vehicle’s market value (aka actual cash value ACV) is considered for providing compensation (when totaled or stolen) under collision and comprehensive coverage and if you have bank loan then you may feel that you are paying more than what you get against totaled car to fill this gap there is GAP Insurance. Gap insurance will protect you by pay remaining amount to lender bank. You must consider buying GAP insurance for new car where you made less than 20 percent down payment and for longer duration loan. Roughly it may cost you around $20 a year but depends on your car value and your age etc.
Insurance claim may be denied if you use your car for commercial purpose. which include using sharing a ride service. To get coverage you need to buy supplemental insurance for car owners who provides ride sharing services.
Cancellation / non-renewal
In case of any misrepresentation by applicant insurer can cancel policy or in case of non-payment of premium.
Deductible amount is required to pay when you want to claim for an accident.
policy with lower deductible has higher premium and vice versa.
limits are set in the policy for each accident, insurance company will not pay more than limit specified in the policy. In case loss is more than limit, in that case you must bear remaining cost.
Know your policy
Insurance policies might exclude other drivers from coverage if you are not driving and others are driving and claim arises then insurer will not pay, some policy requires you to add list of possible drivers and some need cars owner’s consent for driving his car.
US insurance is not valid in Mexico. Your existing policy is not valid for car racing, you should buy separate insurance.
Endorsement: Is supplemental insurance added to your auto insurance policy to provide additional coverage its cost added to the policy.
Personal insurance does not cover business usage.
How to save dollars on car insurance | Discount
- Very important get several quotes from different companies for comparison.
- Ask for a discount if you want to buy insurance for multiple cars.
- Check for good driver discount.
- Go green can save you on insurance, walk or use of cycle or public transport.
- Ask for discount for airbag, anti-theft devices feature, etc.
- Change to the higher deductible for collision and comprehensive coverage.
- Many companies offer discounts to Veterans, active-duty military personnel, and National Guards.
- You can think on dropping comprehensive coverage for older vehicle which has already lost significant market value.
- Switch to half yearly or annual payment to get the best rate.
- Buy home insurance/renters insurance from the same company to get the best discount on car insurance.
- Every state requires liability insurance and the legally required limit is very low; buying additional higher coverage, can save you a lot in long run.
Rental car reimbursement coverage
You get car rent reimbursed when you get into an accident, and you rent a car while your vehicle is being repaired as a part of claim.
Rental car Insurance
Car rental companies offer insurance over the counter but don’t worry your existing car insurance already have covered you for rental cars, provided you are using rental car for personal travel; you will be responsible for paying deductibles and filing a claim.
Check your policy details before you plan your trip as you don’t want to pay double for which you are already covered and don’t want to miss on insurance, to clear confusion, check your insurance limits.
if you are renting a car of the same size then same limits might be sufficient but if you are renting a big car than you drive then coverage limits might not be sufficient for damage.
Credit card also offers rental car insurance, get more details from credit card company.
If you don’t have your own car and you are frequent traveler with rented car then it is better to buy nonowner liability policy which pays for damages and injuries you caused to others, not yours, it is also required to keep driving license.
suppose you have borrowed a car and you had an accident; car owner’s insurance will pay if owner don’t have insurance or it is not sufficient then your insurance can pay for damages and injuries you caused.
When you get a new car, your existing insurance will cover you about 20 days, inform insurance company about your new car, whether it is an additional or replacement car and evaluate coverage requirement.
Over the counter Rental car insurance | collision damage waiver (CDW) | Loss Damage waiver (LDW)
Rental companies have the least possible coverage on their vehicles
CDW (Collision damage waiver) insurance covers rental car damage and theft of the car. you can choose to add supplemental coverage.
Liability coverage is for paying other vehicles damage and their properties.
Personal accident insurance will pay medical bills for you and your passengers in case of an accident.
Personal effects coverage will pay for stolen belongings from the car.
Insurance for young drivers
Buying new insurance for young drivers is usually costly, another way is adding them to your policy is cheaper.
Some companies offer discounts when
- Student gets at least “B” consistently.
- Student enrolled in a recognized drivers training course
- College student who stay away from school but don’t use their car to campus.
Young driver who starts driving and are not listed in your policy must be added to your policy to avoid claim denial.
Best Car Insurance Companies of 2022
- Progressive
- Sentry
- Allstate
- State Farm
- Erie
- New Jersey Manufacturers Group
- USAA
- Allstate
- Auto-Owners
However, you must get quotes from all possible agencies of your state
Auto insurance average cost in 2022 | auto insurance monthly cost
Depends on state, coverage opted, limits, deductible, age of the car, traffic and driver etc.
Some states have spent less and some have spent higher.
National level average yearly spent on car insurance is around $1500 -$1700.
Auto Auction | Copart | IAA | public auto auction
Great way to buy used car in an online auction.
Online auto auction is becoming popular any one can buy/sell
Check out today’s auction details
Hit and run case how am I covered?
In case of hit and run your collision coverage will pay for repair.
You can claim for repair, but you will have to pay deductible and if driver is identified you can recover your deductible from other driver’s insurance.
Auto insurance without license | auto insurance with a suspended license
Without license, it is difficult to get car insurance. There can be a situation due to age, physical fitness, health, vision problem or old people do not want to drive and for some people might have suspended license but they have car and family member or caregiver drive for them.
In such a situation you buy insurance and list all your drivers as primary operators and add yourself as excluded drivers, this is the best way to get your car insured.
As you are listed as an excluded driver means you will never drive your car and insurance won’t cover you when you drive a car or get into an accident.
Medical Payment Coverage
will pay towards medical expenses
if required below will also trigger.
Uninsured Motorist Bodily Injury Coverage
Personal Injury Protection
Auto insurance limits 100/300 | what is 100/300/100
These are the Liability coverage limits for each accident.
$100,000 is for bodily injury
$300,000 is for total limit for bodily injury
and $100,000 is for property damage
What are the top five Commercial Auto Insurance companies in 2022?
- Progressive
- Nationwide
- Farmers
- The Hartford, and
- State Farm
are the best for Commercial Auto Insurance Companies.