Driving a vehicle is a privilege most adults enjoy. People often take pride in the cars they own. They rely on those vehicles to get them to work, school, friend’s homes, shopping malls and simple getaways. People want to get where they are going and expect to do so without incident.
However, sooner or later, most people do have an accident. Sometimes the owner’s vehicle is damaged and it becomes important to the owner to repair or replace the vehicle. Sometimes, a driver damages the vehicles of other drivers. Think about the value of new cars on the road these days. In these cases, the driver can be responsible for thousands or tens of thousands of dollars in damage to the property of others. While vehicles are important to people, when damaged, they can be repaired or replaced.
Sometimes accidents cause damage to people. If this were to happen to you, how might your life change? If this happened to someone else as a result of a driver’s actions, what financial responsibility might the driver causing the accident have to the families of the injured parties? What might this driver stand to lose? This is where Auto insurance comes in. When an unexpected event happens that is related to the ownership or operation of a vehicle, having the right amount of insurance could help remedy damage to vehicles, pay financial costs of medical care, and keep the things someone has worked so hard for over their life in the event of being involved in a financially catastrophic accident.
Often, people shop for Auto insurance because the law or a lien holder requires the coverage. In these events, they may only choose the minimum coverage required by law but that coverage only goes so far. When they understand what Auto insurance does, most people decide that they need more, sometimes significantly more than the minimum coverage required by law.
Most people don’t enjoy paying for Auto insurance, but most people want to know they can survive the financial, emotional and physical effects of an auto accident. An Auto insurance policy can help a person avoid bankruptcy or garnished wages if a member of the family is successfully sued following a serious car accident.
Typically, Auto policies provide coverage for:
However, sooner or later, most people do have an accident. Sometimes the owner’s vehicle is damaged and it becomes important to the owner to repair or replace the vehicle. Sometimes, a driver damages the vehicles of other drivers. Think about the value of new cars on the road these days. In these cases, the driver can be responsible for thousands or tens of thousands of dollars in damage to the property of others. While vehicles are important to people, when damaged, they can be repaired or replaced.
Sometimes accidents cause damage to people. If this were to happen to you, how might your life change? If this happened to someone else as a result of a driver’s actions, what financial responsibility might the driver causing the accident have to the families of the injured parties? What might this driver stand to lose? This is where Auto insurance comes in. When an unexpected event happens that is related to the ownership or operation of a vehicle, having the right amount of insurance could help remedy damage to vehicles, pay financial costs of medical care, and keep the things someone has worked so hard for over their life in the event of being involved in a financially catastrophic accident.
Often, people shop for Auto insurance because the law or a lien holder requires the coverage. In these events, they may only choose the minimum coverage required by law but that coverage only goes so far. When they understand what Auto insurance does, most people decide that they need more, sometimes significantly more than the minimum coverage required by law.
Most people don’t enjoy paying for Auto insurance, but most people want to know they can survive the financial, emotional and physical effects of an auto accident. An Auto insurance policy can help a person avoid bankruptcy or garnished wages if a member of the family is successfully sued following a serious car accident.
Typically, Auto policies provide coverage for:
- Bodily Injury (BI). Pays for injuries to other persons if the insured is responsible for the accident.
- Property Damage (PD). Pays for damage to other vehicles or the property of others if the insured is responsible for the accident.
- Uninsured/Underinsured (UM/UIM). Pays for injuries to the insured or their passengers if the other party is at fault and doesn’t have insurance or has an insufficient amount of insurance.
- Uninsured Motorist Property Damage (UMPD). If the other party is uninsured, this option provides property damage coverage by waiving the Collision deductible; in the event of no Collision coverage, it provides a limited amount of property damage coverage. Please see your agent for the specific coverage amount that applies.
- Medical Expense Coverage (MED PAY). Pays for medical bills of the insured or their passengers whether or not the insured is at fault.
- Comprehensive/Collision (COMP). Pays for losses resulting from fire, theft, falling objects, riots, storms, earthquakes, floods, collision with a bird or animal and other natural occurrences. Comprehensive coverage generally includes a deductible. Comprehensive coverage is normally required if a vehicle is leased or if the owner has an outstanding loan on the vehicle.
- Collision (COLL). Pays for damage for the insured vehicle that results from a collision with another vehicle or object. Generally, the coverage reimburses the amount needed to repair or replace the damaged vehicle, minus the deductible. This coverage is normally required if a vehicle is leased or if the owner has an outstanding loan on the vehicle.
- Towing coverage. Pays for reasonable and necessary towing costs when the insured car is disabled.
Let's say a customer has a $250 deductible. If the customer has a fender-bender, and the bodywork costs $1150, the customer will pay the deductible - $250, and the insurance company will pay the balance - $900. Choosing a higher deductible reduces the cost of insurance.
In some states, insureds present claims for injuries and other damages, such as wage loss, to their own insurance company regardless of who was responsible for the accident. This form of insurance is called No-Fault insurance. The specific coverage that applies is called Personal Injury Protection (PIP).
Here’s an example of how an Auto policy might work:
Our insured, Max is at fault for running a stop sign and striking Michael’s car. Both cars are damaged in the accident and both Max and Michael are injured. Michael has his own Auto policy, but will seek coverage under Max’s Auto policy because he’s legally responsible for his damages. Max’s policy provides all of the coverages listed above which apply as follows:
- Bodily Injury. Will pay for Michael’s injuries, up to Max’s policy limits.
- Property Damage. Will pay for Michael’s damaged car and the rental car while his car is being repaired.
- Uninsured/Underinsured. Won’t apply. This coverage would apply only if Michael’s had been at fault and uninsured or underinsured, neither of which are the case.
- Uninsured Motorist Property Damage. Won’t apply to Max’s damaged car since Michael has insurance and Max was at fault.
- Medical Expense Coverage. Will pay for Max’s medical bills up to a specified amount, depending on how much coverage he purchased. Remember, the bodily injury coverage will pay for Michael’s medical bills and related damages.
- Collision. Will pay for the damage to Max’s car, but won’t pay for a rental car.
- Comprehensive. Won’t apply, since the damage to Max’s car was caused by a collision. Comprehensive coverage pays for damages other than collision, such as vandalism, theft, falling objects etc.
- Loss of Use. Will pay for Max’s rental car up to a specified amount, depending on the amount of coverage purchased, for up to 20 days while Max’s car is being repaired.
- Towing. Will pay reasonable and necessary towing charges to get Max’s car to a repair shop.
