Car Insurance

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Why Have Car Insurance?

So you get your first car - now you need to insure it. Here's the info on car insurance.

Automobile insurance covers motorized vehicles, which require a separate policy for property damage and liability. Motorized vehicles are not covered under a homeowners insurance policy for property damage and/or bodily injury liability situations when operated away from an insured's premises.

Insurance companies look at many details when setting the price for insurance policies. Price alone should not be the basis of your decision. There are other factors to consider, including quality of service provided, the claims process, policy provisions, and coverage limits.

State Requirements:

Almost all states require certain minimum limits on car insurance.

If you are in a business where you drive people around for any reason (excluding family): We always recommend full coverage.

Insurance Coverage

When comparing different auto insurance quotes make sure you compare plans with the same terms.

Here are the common coverages on most auto insurance plans:

Bodily Injury Liability

Pays your legal bills and claims against you if your car is involved in the injury or death of another person. The coverage extends to others driving your car if they are using the car with your permission.

Medical Payments

Pays accident-related medical expenses for you and your passengers. Also pays if you or your family members are injured while riding in another's car or are struck by a car while walking.

Uninsured/Underinsured Motorist

Pays for costs related to property damage or injuries to you, your family members, or guests in your car if the damage or injuries are caused by an uninsured, underinsured, or hit-and-run driver.

Property Damage Liability

Pays your legal defense costs and claims against you if your car is involved in damage to another's property. Does not cover your property, including you auto.

Collision

Covers damage to your car caused by a collision with another vehicle or any other object, regardless of whom was responsible.

Comprehensive Physical Damage

Covers damages to your car resulting from theft, fire, hail, vandalism, or a variety of other causes.

We've also included a dedicated page to each major coverage type including add-ons for your insurance policy.

Liability Coverage

Liability coverage is the basis for auto insurance coverage. Almost all states require a minimum of liability coverage.

If the accident is your fault, the liability insurance would cover the property damage and bodily injury expenses you inflict on others. This would include your legal bills that result from such an accident. The injury coverage would pay for such things as : lost pay and medical bills. The damage coverage would pay for repair of items damaged by you (not including your own car).

Forty-five states require the purchase auto liability insurance (Wisconsin, South Carolina, Virginia, Tennessee, and New Hampshire don't mandate liability coverage), so your insurance requirements will depend on where you live.

Sometimes you may cause an accident where your minimum coverage may not cover the damage/injury. If you can afford it, you should consider buying more than the bare minimum. In most states, the at fault party may be sued by the other driver.

Comprehensive and Collision

Collision covers your car in an accident that's your fault. Comprehensive covers your car in non-accident cases such as theft.

Collision coverage is what pays for your vehicle if you cause an accident. The insurance company will pay you an amount equal to the current value of you automobile, not the replacement cost. This is typically what causes insurance to cost so much. If you are in an industry where this is required or recommended - consider a higher deductible to keep you costs down.

If your car is vandalized, stolen, or set on fire comprehensive is the coverage that would pay for damages. Comprehensive coverage usually has it's own deductible. Again - for cheap insurance - raise the deductible.

The term "total" comes into play when the damage of car repair exceeds the insurance companies limit (usually based on a percentage of the value).

A lot of the coverages and limits will depend on the value of the car you own. If the car is worth only $1000 it might not make sense to have $20,000 comprehensive coverage as the auto insurance company will only pay the value of the car at time of accident.

PIP (Personal Injury Protection) and No-Fault

No-Fault, personal injury, and medical payments coverages can be required in some states, but not all.

If your passengers get injured in an accident caused by you - Med Pay is what would cover the costs. It can go into effect if you're driving someone else's car, driving your car, or if you are a pedestrian. The coverage will pay no matter who's at fault. You insurance company may attempt to collect from the at fault party (if not your fault).

PIP, or personal injury protection, is coverage for medical expenses and some insurance companies may offer extra benefits that include lost wages and child care expenses. Some state have this coverage as a requirement.

Some of these items may be unnecessary if you have a good health insurance policy.

Uninsured/Underinsured

Be prepared! With an increasing amount of drivers without insurance - you don't want to get stuck with the bill for someone else's fault.

Uninsured motorists (UM) coverage pays for your injuries if you're struck by a hit-and-run driver or someone who doesn't have auto insurance. It is required in many states.

Underinsured motorists (UIM) coverage will pay out if the driver who hit you causes more damage than his or her liability coverage can cover. In some states, UM or UIM coverage will also pay for property damages.

Insurance Add-Ons

We call them convenience features. You might not want to do without a car in case you get in an accident.

Here are some things that might relieve some stress:

Rental reimbursement:

If your car is stolen or damage in an accident - this will pay for the cost of a rental for that time.

Towing coverage:

If you have a flat on the side of the road or if you can't start your car - this will pay to have the car towed to the repair shop for you.

Gap coverage:

For your new car - this will pay the difference between the actual cash value you receive for the car and the amount left on your car loan if your vehicle is totaled in an accident.

Gap coverage is especially nice when you have a $0 down payment auto loan or if you financed taxes and registration into the loan. It would also come in handy if you have an auto that has a high rate of depreciation.

Motorcycle Insurance

Do you need motorcycle insurance or insurance for your ATV? Here is some info on coverages.

Motorcycle insurance has the same basic coverages as car insurance. It also can include two unique types of coverage.

They are :

Custom Parts and Equipment (CPE) At some companies : when Physical Damage Liability coverage is purchased, $1,000 of Custom Parts and Equipment (CPE) coverage is included. Additional CPE coverage can be purchased to cover equipment, up to $30,000 at some companies.

CPE covers equipment, devices, accessories, enhancements and changes, other than those that the manufacturer originally installs, that alter the appearance or performance of the motorcycle or ATV. This typically includes:

Any electronic equipment, antennas and other devices used exclusively to send or receive audio, visual or data signals or play back recorded media, other than those that the manufacturer originally installs, that are permanently installed on the motorcycle using bolts or brackets, including slide-out brackets, sidecars, trailers designed to be pulled behind a motorcycle or ATV, trike conversion kits, custom paint, custom plating or custom exhaust, mower blades, plow blades or winches, safety riding apparel, including helmets.
(Coverage is provided in the event of a Collision loss. Theft is not covered.)

Please note: We recommended you retain photos of the motorcycle and all receipts for custom parts for your insurance company in case of accident.

Roadside Assistance

Roadside Assistance coverage provides towing to the nearest qualified repair facility and necessary labor at the place of disablement when your motorcycle is disabled.

Boat Insurance

Not sure what to look for when looking for boat insurance? Keep in mind the basic coverages are very similar, but these are unique to boat insurance.

On-Water Towing and Labor Coverage Service

This pays for towing and labor costs up to approx. $1,000 per occurrence while the boat is in the water. This is usually a reimbursement coverage.

Fishing Equipment Coverage

This coverage pays for loss or damage to fishing equipment while on board an insured boat or while being carried on or off an insured boat. Theft is usually supported by visible evidence of forcible entry. A tackle box is considered one item regardless of the number of lures, hooks, baits and other items stored in the container.

Fuel Spill Liability

Coverage for unintentional oil or fuel spills that result in bodily injury or property damage for which the insured is legally responsible because of an accident arising out of the ownership, maintenance, or use of the insured boat.

Wreckage Removal

Covers reasonable costs incurred by the insured for any attempted raising, removal or destruction of the wreckage of an insured boat/PWC resulting from any loss for which physical damage coverage is provided. The limit of liability varies based on whether or not the insured is legally required to raise, remove or destroy the boat/PWC.

Navigational Area

The policy provides coverage for navigation of all inland lakes, rivers and navigable waterways of the continental United States and Canada including ocean waters 50 miles or less from the coast of either the United States or Canada. This does not include the territory or territorial waters of any country other than the United States or Canada. There are no restrictions or surcharges when the insured takes the insured boat out of the home navigational waters.