Automobile Resources: The Basics You Should Know

01/15/2015

If you own a car and are law abiding, you will likely be looking for automobile insurance to keep you protected. Most states have minimum coverage laws, but in many circumstances, these laws will not cover the needs of the insured. There are basics that you need to know to educate yourself prior to shopping for a policy that effectively covers your needs.

Liability Insurance

Liability covers another person's expenses should you cause an accident. This includes medical or rehabilitation expenses which is referred to as bodily injury, as well as damage to the other person's property. It is important to note that this coverage does not include your car. You must have collision coverage if you want to insure your own car. Most states require liability coverage. For example, in Tennessee, the current minimum liability limits are $25,000/$50,000 for personal injury protection and $15,000 for property damage per accident. This means that if the covered person causes an accident, their insurance company will cover up to $25,000 for bodily injury, $25,000 for any additional injured persons, and $15,000 to repair or replace a car. Given the value of many automobiles on the road, this minimum coverage can leave the insured exposed. 

Collision Insurance

Collision covers the replacement or repair of your damaged automobile should it be in a collision with another vehicle or object. If your car is leased or financed, it is required, but if you own your car, it is optional. It is important to know the value of your automobile and to determine if you can afford a complete loss should you have an accident. Collision insurance will have a deductible and a limit that is directly related to the actual cash value of the car.

Comprehensive Insurance

Comprehensive covers damage to your car that is not caused by a collision including falling trees, vandalism, fire, some weather events, or even hitting an animal. It can also include theft. Comprehensive insurance will add some cost to your policy, but it is usually minimal compared to the cost of repairing or replacing your car. If you consider the cost of automobile repairs, the premium will likely seem reasonable.

Underinsured and Uninsured Protection

Underinsured protection covers you should you have an accident with another person who does not have enough insurance to cover your losses. If your car is worth $20,000 and the other person only has $10,000 worth of coverage, this protection helps cover the $10,000 difference. Uninsured protection covers you should you have an accident with another person who neglected to purchase liability insurance of their own. While it would be nice to believe all drivers are responsible, the reality is that many people fail to meet the legal requirements.

Rental Reimbursement

Rental reimbursement allows you to rent a car should your car be in the shop for repairs or while you are shopping for a replacement. While this is an optional coverage, it is important to determine if you have access to transportation should you be without a vehicle.

Lapses in Coverage

Lapses in coverage are bad, bad, bad. Allowing your car insurance to expire can be extremely costly. Obviously, if you have an accident, you are not covered. If this happens, you are likely to be involved in a lawsuit and will be required to pay for everything out of your own pocket. After your insurance lapses, you could find it extremely difficult to get new coverage. Most insurance companies will view you as high-risk and will only insure you with higher rate policies. In some states, a lapse in coverage could even go on your driving record.

Understanding these terms can help you in finding coverage that is appropriate for you. Hall Insurance Agency has the experience it takes to advise clients on all of their insurance needs. If you need guidance while making your insurance decisions, please contact us for more information.