Auto

How and why do I insure my vehicle?
Auto insurance is purchased as a “package” of several coverage types. Each is priced separately and protects you in specific circumstances. Available coverage and minimum requirements vary by state.

BASIC COVERAGE

DESCRIPTION

BODILY INJURY LIABILITY

  • Pays up to coverage limits for an injured individual’s accident-related medical expenses, lost wages, or pain and suffering, when applicable, if you or the driver of your vehicle are held legally liable.
  • Pays your legal defense costs.
  • Coverage applies when you and your resident family members are driving someone else’s vehicle with his or her permission.
  • All states have minimum liability coverage limits set by state law.
  • Higher coverage limits may be purchased at an additional cost.

COLLISION

  • Required by most lenders.
  • Pays up to coverage limits to repair accident-related or rollover damages to your vehicle.
  • Pays your vehicle’s actual cash value (ACV) if it is a total loss (totaled), following an accident or other covered event. ACV is the cost of replacing a destroyed vehicle with a comparable vehicle. Some insurers might offer replacement cost for new vehicles, generally those less than two model years old.
  • Subject to a deductible, which is a specific amount of money you pay before your insurance company begins to pay on a claim.

COMPREHENSIVE

  • Pays up to coverage limits to repair damages to your vehicle caused by events other than collision, including vandalism, glass breakage, fire, and flood.
  • Pays your vehicle’s ACV if it is totaled. ACV is the cost of replacing a destroyed vehicle with a comparable vehicle. Some insurers might offer replacement cost for new vehicles generally those less than two model years old.
  • Pays for loss if your vehicle is stolen.
  • Subject to a deductible, which is a specific amount of money you pay before your insurance company begins to pay on a claim.
  • Required by most lenders.

MEDICAL EXPENSE

  • This generally pays up to coverage limits for accident-related medical expenses for you and your passengers, regardless of who is legally liable. In some states, this coverage is termed “medical payments.”
  • In states with no-fault laws, which generally restrict the right to sue, this coverage might be called “personal injury protection” (PIP). In addition to medical expenses, PIP might pay for lost wages, as well as personal services such as housekeeping, if you or another covered individual are incapacitated after an accident.

PROPERTY DAMAGE LIABILITY

  • Pays up to coverage limits for another individual’s accident-related vehicle or property damages if you or the driver of your vehicle are legally liable.
  • Required in all states. Minimum liability coverage limits vary.

UNINSURED MOTORIST

  • Pays up to coverage limits for bodily injury to you and your family your passengers. It covers you, your family, and your passengers for medical expenses; lost wages; pain and suffering, when applicable; and other injury-related losses.

UNDERINSURED MOTORIST

  • Pays up to coverage limits for bodily injury to you, your family, and your passengers resulting from the negligence of someone whose liability coverage limits are insufficient to cover your damages resulting from the accident. The coverage for damage caused by an underinsured motorist vary from state to state.

OPTION COVERAGE

DESCRIPTION

RENTAL REIMBURSEMENT

  • Pays up to a specified amount for rental vehicle charges while your vehicle is being repaired for damages covered by your policy.

TOWING AND LABOR

  • Pays for service at the location of a breakdown or for towing to a repair shop.
  • Generally does not include payment for vehicle repair or costs above and beyond towing.
  • Pays for locksmith and cost of tire-change services. Does not cover the cost of the tire.

UMBRELLA
LIABILITY
(A SEPARATE POLICY)

  • Provides an additional $1 million or more liability coverage beyond your basic liability insurance.
  • Pays after basic liability coverage is exhausted.
  • Applies to auto, homeowners, renters, or boat liability coverage. Some insurance companies might require increased limits of basic liability insurance for these underlying policies before issuing an umbrella policy.
  • Might provide primary liability coverage for personal injuries such as libel and slander.

Note: Generally, auto insurance does not cover personal possessions that might be stolen from your vehicle. For that, you need property insurance (homeowners or renters policy).

ABOUT PREMIUMS

Auto insurance premiums vary by state. They are based on how likely you are to have a loss and how much those losses will cost. The factors below may affect your premiums. For family vehicles, premiums will reflect the characteristics of all licensed drivers in your household. Some states do not allow insurers to consider certain factors.

GENDER

  • Premiums tend to be higher for men than women. Statistically, male drivers tend to be involved in more accidents than female drivers. However, recent increased accident trends for young female drivers suggest the gap may be narrowing.

AGE AND MARITAL STATUS

  • Generally, premiums decline as young drivers age. However, after 65 years of age, premiums might begin rising again. Also, married drivers usually pay lower premiums than single drivers.

WHERE YOU LIVE

  • Drivers living in metropolitan areas generally pay more than drivers in rural areas.

TYPE OF VEHICLE

  • Expensive and high-performance vehicles tend to be more costly to insure. The vehicle’s likelihood of theft, repair costs, and safety record also might affect premiums.

DRIVING RECORD

  • The better your driving record (avoiding accidents and tickets), the lower your premiums.

FINANCIAL RESPONSIBILITY

  • Having a lapse in auto insurance coverage or a history of late or missed payments might increase your premiums.

TO LOWER PREMIUM COSTS

  • Discounts might be available to lower your premiums. When comparing insurers, ask about discounts they offer in your state.
  • Provide your insurer with accurate, complete information about your address, age, vehicle, and vehicle use.
  • Ask for higher deductibles. Make sure you have the deductible amount available, if needed.
  • Look for safety features when purchasing a vehicle. Insurers may offer discounts for vehicles equipped with airbags, antitheft devices, and daytime running lights. Vehicle alarms and locator devices might reduce comprehensive coverage costs.
  • Reduce or eliminate collision and comprehensive coverage on older vehicles.
  • Drive safely.
  • Take a state-approved defensive driving or drug and alcohol awareness class.
  • Maintain a good credit rating.

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