CityAutoInsurance

This one is pretty simple. It acts just like your liability coverage, but it covers YOU. If you get involved in a hit and run accident, or the person who hits you doesn’t have coverage in place, or even ENOUGH coverage, then uninsured motorist coverage would kick in. If this coverage is used, it is likely that there will be some deductible applied before coverage is paid. Check the rules in your state to see what the deductible amount is!

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Photo credit/Flickr/Kevin Saff

This coverage is another one that can come in handy. If you have more cars than you have drivers in your household, you may not need it, but it is very inexpensive and works well for you if your car is in the shop due to a covered claim that your policy is going to pay for.

For example, let’s say you have an old beater. It RUNS, but only something you use when running to the landfill and back. Well, if you don’t have car rental coverage, and you have to drive that old beater, and your main car is getting fixed and it is taking a LONG time…well, you may just wish you had it. I have encountered this scenario many times. It is rare that I have come across a client who didn’t wish they had this coverage when they needed it. Here is a quick explanation of how it would kick in:

You have an accident. The accident is your fault. You need a rental. You rent the vehicle, and the insurance company either pays for it, or reimburses you. There are times when the accident is NOT your fault, but because fault has not been  determined, your rental coverage may kick in, but in the end, the other company ends up paying the entire bill. Either way, this coverage is a nice safety net to have if you need to get around.

The coverage varies from company to company, but most companies do not cover your rental 100%. They cover a portion of the total cost. For example, some companies will cover the cost as a portion up to a maximum, let’s say 80% up to $1000. (your rental car bill is $1100. Your company would pay $880, you would pay $220. NOTE: This coverage will NOT pay for you to rent a car while you are vacationing in Florida…it ONLY kicks in and is available in the situation of a covered claim. Now, if you DO decide to rent a car while on vacation, your policy coverages may automatically transfer over to the rental. Check with your agent on how this works in your state.

Photo credit/Flickr/JoelZimmer peretzpup

Most folks just call this coverage towing, but actually it does a lot more. Believe me, if and when the times comes you need this coverage, you will be GLAD you had it in place. The few dollars it does cost will be outweighed by the peace of mind you feel when the insurance company pays the claim. Here are a few scenarios where this coverage can come in handy:

1. Your car breaks down and needs to be towed-most policies will only pay for your car to be towed to the nearest facility to be fixed, so keep in mind REASONABLE costs. You can’t tow your car 300 miles because you are moving OR because you have a favorite mechanic that lives hours away from where you broke down.

2. You run out of gas and need someone to come and bring you gas-won’t pay for your buddy to haul it to you, but will pay reasonable costs for a service center to get you back on the road

3. You get a flat tire-again, you may want to be towed, or just need help with the flat.

4. You lock your keys in your car-It happens, and it can be expensive!

As always, companies vary on their specific procedures, so check with your company to make sure how they pay these claims. Some reimburse you once you get a bill, others pay the companies directly (i.e. the service repair company or tow truck). Here is a hint: If you are worried about whether or not something is covered BEFORE you have paid, then call your insurance company! NOW is the time to find this stuff out!

If you have a situation, then pay for it out of pocket, and try to get your insurance company to pay and it is not covered, it is too late! If it is something that you had to pay for anyways, then it makes no difference what the coverage is. For instance, if your car is stuck on the side of the road, are you going to just leave it there because your insurance company is not going to give you $80 to tow it home? You get the point. Insurance companies are pretty reasonable with these coverages as long as YOU are as well. One thing to remember, if you pay fo  something and are looking to get reimbursed, keep receipts and document the info. The name of who you paid, the driver, etc. The more info, the easier you can get your money. Generally, these types of claims don’t result in anything negative on your claims history, as long as they are not abused. If you have a month where you: lock your keys in your car, your car needs to be towed TWICE, your run out of gas AND have a flat, and you want a check for each incident, well, they may be talking to you.

Photo credit/Flickr/mindfrieze & sun dazed

This is a pretty cool coverage actually. COMPREHENSIVE COVERAGE covers pretty much any other damage to your car other than collision. (unless it was a hit and run, but we’ll HIT that one in a minute…pardon the pun.) Ok, let’s say you’re driving down the road, and the stupid truck in front of you kicks up a stone, and lo and behold BAM! Your windshield is cracked! Should you chase the scoundrel down, and get his information to get HIS insurance to pay for it? NO! Just file a comprehensive claim!

How about that one morning, you went out to your car, and found that some idiot had keyed the whole left side? Should you file a police report and send out an all points bulletin? Heck no! File a Comprehensive claim! (ok, this is fun, let’s try another one…) How about that OTHER morning, when you went out to your car and…FOUND OUT THAT THERE WAS NO CAR??? Should you call the cops? Yes, do the call the cops, but THEN file a COMPREHENSIVE CLAIM!!!

If your car was damaged, and it wasn’t due to a collision or another car (hit and run) or it was stolen, it is a comprehensive coverage claim AND guess what? You don’t have to be afraid to turn one of these in! This coverage is looked at as NOT BEING YOUR FAULT, and it won’t be held against you. There ARE extreme circumstances where the insurance company can question MULTIPLE claims of this nature, but for the most part you can rest assured that you will receive coverage with no ill effects to your insurance. The coverage is fairly inexpensive as well when compared to collision. There ARE deductibles associated with this coverage like collision, but considering how inexpensive it is, I recommend most go with a low deductible. More on this later.

Here are some more common scenarios that happen to people that are actually  COMPREHENSIVE claims:

• Car getting keyed or vandalized
• A branch or tree falling on and damaging the car
• A rock or other object falling off a truck on the highway causing damage
• Hail damageHitting a deer or other animal (yes, although you may be actually driving the car, most insurance companies will recognize these accidents as comprehensive due to the unpredictable nature of wild animals)
• Accidental damage caused by owner while car is parked and unoccupied(one time…I was throwing wood in the back of my pickup, and a log went through the rear window…3 times…YES 3 times…)
• Windshield crack or break (this includes other windows as long as damage wasn’t due to collision) As you can see, there are quite a few scenarios where the inexpensive coverage COMPREHENSIVE can be of use, and considering this crazy world of ours, there surely MANY more I haven’t listed. Bottom line? Comprehensive can be your friend.

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Remember when I said that PIP is sometimes referred to as NO FAULT COVERAGE? Well, there are some states that are actually NO FAULT STATES. In other words, no matter who is at fault for an accident, your policy pays for you, theirs for them. These states may allow you to carry higher than normal PIP or MEDICAL COVERAGE limits because the policies are set up a little differently. I will go over NO FAULT STATES in more detail in another Post.

Collision Coverage COLLISION. Every insurance agents favorite word…NOT! This coverage is one of the most widely used, yet most misunderstood of the policy. Let’s start with the simple definition first, then dig a little deeper…

A COLLISION is simply what it sounds like…it occurs when the car HITS something. Rule of thumb, there pretty much has to be a driver in the car when a collision occurs, but I have heard of a few instances where someone’s emergency brake failed,the car rolled down a hill, and BAM! For this coverage to be enacted, the ensuing damage has to be YOUR fault, and it covers YOUR car only. Remember, the damage to the other car will be paid by the PROPERTY DAMAGE portion of your LIABILITY.

C ollisions happen every day, and chances are that you have had at least a minor one at some point yourself. People hit all kinds of stuff, mailboxes, shopping carts, brick walls, restaurants, and yes, even other cars. REMEMBER THIS: If your car HITS it, it is probably a collision. This fact has to be stressed because so many people want to blame other things as the cause for collisions the insurance company will deem YOUR fault. This is important because it can make the difference to some between turning in a claim, and just paying for it out of pocket.

Here are a few examples I have come across in my years of taking claims:

• 1. “I slid on the ice, I could not control my car and hit the guardrail.” COLLISION
• 2. “Another car cut me off, I had to swerve and hit a sign.” COLLSION
• 3. “Something fell of the truck in front of me while I was on the highway, and I could not avoid it and I ran over it causing damage.” COLLISION(this scenario is paid under collision a lot of times, but it IS worth fighting for, some claims adjustors will see your side and will not fault you for an incident such as this. Rare, but it does happen)

Those are just a FEW of the multitude of ways we can have collisions, but I wanted to point these few out so you remember, if there is NO ONE else involved but you, and your car was moving when damage occurred, it is probably a collision. One very important tip to remember when looking at collision coverage is the affect it can have on your rates. If you have a collision, it is considered an AT FAULT incident, and your rates can go up…even after only ONE claim. If you have several collisions, you can be cancelled, and getting insurance elsewhere may be MUCH higher. CALM DOWN…I know what you’re thinking, but have no fear.

I have some great tips on choosing this coverage, how to save money, and whether or not you should turn in certain claims. Sounds cool? Great, that is coming up in the sections on DEDUCTIBLES and CLAIMS. Now that we have an understanding of collision, what about everything OTHER than collision?

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The next one we’ll look at is MEDICAL COVERAGE, sometimes known as PERSONAL INJURY PROTECTION or PIP or NO FAULT coverage. This coverage will actually cover YOUR medical expenses if you are in an accident no matter who is at fault. “What about the bodily injury liability coverage we just learned about?” you may be asking. Good question, and here’s how it works.

If you were in an accident and were hurt, no matter who was at fault, chances are that your PIP would be enacted to begin paying your medical costs. Don’t think that this gives you an out to carrying lower liability limits however, because most states only allow you to purchase PIP limits of $10,000 or lower. This coverage, depending on the state, may also pay for your lost wages in the event you are out of work due to an injury. If your policy says PIP, chances are that that is the case. If it only states MEDICAL COVERAGE, it may not cover lost wages, but you still may have a separate coverage that does. Be sure to check with your insurance company so you know what yours does and doesn’t cover. Most states require you to have PIP coverage as part of the policy, but even then most will allow you to waive it if you so desire. This MAY make sense for you to do, but it really depends on several variables. For one, let’s say you have fantastic medical insurance with no deductible and HUGE yearly payouts. You may not have quite the need for PIP as someone who doesn’t have medical insurance, or who has very high deductibles to satisfy if he/she is injured. You may be rich, and would rather put the money you would put into PIP coverage in the bank instead.

Finally, you may be stubborn, and just feel that if you have an accident and the other person is at fault, he will pay one way or the other…and if it is YOUR fault, you willdeal with it when it happens. (I use this last one because it is almost exactly what a policyholder said to me one time…) The bottom line on this coverage is it’s not very expensive, and it usually makes sense to carry it even if you only have the minimum offered.

Your medical bills will be paid up to the maximum, you will recoup lost wages (up to the maximum on your particular policy) and it won’t affect your policy negatively by enacting the coverage. In fact, if EVERYONE had higher PIP limits, it would actually lessen the total payouts for BODILY INJURY LIABILITY and may result in lower premiums across the board for that coverage.

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Photo credit/Flickr/uriba

Ok, so here’s a scenario for you. You are stopped at a stoplight, just minding your own business, when all of a sudden WHAM! You are slammed into from behind.

Your car is smashed, and your neck REALLY hurts. It is pretty darn obvious who is at fault, and you get out of the car to exchange information. The person you are talking to is not exactly giving you the detailed information you were hoping for, and you begin to suspect something is wrong. The next day, when you DO try to verify the info that they gave you, you realize the truth…THEIR CAR WAS NOT INSURED!!!

What do you do now??? That’s why you have UNINSURED MOTORIST IABILITY protection! This coverage will protect you for medical injuries AND property damage that occurs by  someone who does not have insurance, or who has limits that are too low. The same coverages of BODILY INJURY (BI) and PROPERTY DAMAGE (pd) as are found in the REGULAR  liability portion of your insurance policy apply, except in this case, they cover YOU. Because the accident was not your fault, using this coverage does not go against your insurance record either.

Most companies DO charge a fixed deductible, however, to even out the costs of those who are lying to use this coverage. One reason for this is that this coverage will cover you even if the incident is a hit and run. SO, there are SOME people, unscrupulous as they are, that will go out and hit something with their car, and claim that someone did it while they were parked, but left the scene. Check with your insurance  company to find out exactly what the fixed deductible is for your state.

I will go more into coverages at a later time, but here’s a quick note about UNINSURED MOTORIST LIABILITY…the premium for this coverage is very inexpensive, and I recommend you choose the same liability limits for this coverage as you did for your REGULAR liability portion of your policy. If those limits are good enough to protect SOMEONE ELSE, why not have the same limits to cover YOURSELF? Also, some states require that you mirror the liability limits that you have for your regular BI/PD liability limits UNLESS you specifically sign a waiver. Just to sum up UNINSURED LIABILITY: If someone hits you and is uninsured or underinsured, or you are the victim of a hit and run either parked or while driving, it is this coverage that will protect you. It is usually subject to a fixed deductible, but DOES NOT affect your insurance record negatively.

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Photo credit/Flickr/Mr.thomas

Ok, let’s start with the BIGGIE. Liability insurance. For those of you who aren’t familiar with the term LIABILITY, it basically means WHATEVER YOU ARE RESPONSIBLE FOR. In other words, if you hit someone else, it is the LIABILITY portion of your policy that will pay for the other person’s damage and/or medical expenses. If THEY are at fault, it will be THEIR policy that pays for YOURS. The liability portion of your auto insurance policy usually looks something like this: 100/300/50. Each number reflects a MAXIMUM amount of coverage for BODILY INJURY and PROPERTY DAMAGE.

In this example, you would have $100,000 to pay for the medical expenses for EACH PERSON involved in an accident you are at fault  for, up to a maximum of $300,000, and you would have $50,000 to pay for the actual property damage you caused. (i.e. to fix the car, your neighbor’s fence, the pizza parlor you ran  into…you get the idea.)

Let’s look at a scenario so you can see what this coverage REALLY means. Ok, let’s say you are at fault for an accident…maybe your car slid on some ice…and you run into and total the other vehicle. The car, much to your dismay, was a brand new Lexus worth about $70,000, and there were 4 people in the car who were all injured, and their medical bills totaled $400,000.

Now, let’s say you have the coverage we mentioned before, 100/300/50. In this scenario, your coverage limits  would have been exhausted, and you would have had to pay $120,000 out of pocket. (your maximum of $300,000 for Bodily injury was exhausted, and their was still  $100,000 owed, and your Property Damage coverage was exhausted and there was still $20,000 owed.) Not a pretty picture, huh?

Although this scenario might be a little rare, it DOES happen, and considering that there are MORE and MORE people on the road EVERY day, your chances for having such an accident increase EVERY DAY. That then begs the question, “How high SHOULD my liability limits be?” Let’s get one thing straight here folks…”THIS IS NOT THE COVERAGE YOU SHOULD TRY TO SAVE MONEY ON!!!” Repeat that phrase…learn it, know it, LIVE it.

Too many people have liability limits that are MUCH lower than they need. One reason is that people will find out what the state MINIMUM is and pick that coverage as their liability limits. This is a VERY dangerous idea. States have to pick minimums for you to carry, and most states require minimums that are too low to be effective in a lot of car crash scenarios. For instance, some states require minimums of 20/40/10. Ok, let’s say you are at fault for an accident, no one is hurt, but the other car is totaled. How many cars on the road do you think are worth more than $10,000? That’s right A LOT.

There really is no reason to carry low liability limits, EVER. Regardless if your car is old, or new, or expensive, or paid off…your damage to another. Be it another car or the person driving it, your car is dangerous, and in order to protect yourself, your assets, and perhaps your future, make sure your liability limits are HIGH. One thing that people don’t even realize is that raising your liability limits is usually not even that expensive. Go ahead and call your insurance company and get a quote for the next level up from the one you are at now.

Now, get one for the next 2 levels up, and so on. Pick the highest level that you really can afford. It makes a lot more sense to pay a little more NOW, than a WHOLE LOT more later…Medical expenses are going up, car repair prices are going up, cost of cars is going up…shouldn’t your liability coverage reflect that? Yes, it should. One more quick thought…and I don’t meant to be so blunt, but if you are worried about affording to pay an extra $100 a year because I am advising you raise your liability limits, how would you feel about getting into an accident and having to afford $200,000 because you neglected to do it? By investing an extra $100 a year or so in your policy, you may be saving yourself HUNDREDS of THOUSANDS of dollars.

photo credits flickr [Simple Insomnia] [ timbrauhn]