Auto insurance protects both you and others from losses when you car is damaged or stolen. The type of insurance coverage determines who receives that financial protection. It may be medical payments to those injured in an accident you cause. Property, including storefronts, homes, or sign posts, may need to be repaired. Your lender may receive payments to cover the unpaid balance on your loan. Individual states have mandated the types of insurance and the limits of coverage that a driver must carry in order to register or drive a vehicle. Lenders also determine your insurance requirements and include them as a clause in your loan document.
At minimum, state laws will require that you carry liability insurance. This consists of three categories of coverage and is normally stated as a series of three numbers. The first number is the maximum the insurance company will pay for injuries suffered by one person in an accident you cause. The second number is the maximum paid for injuries to two or more people injured in the same accident. The third number represents the maximum that will be paid for property damage. Liability does not cover your injuries or the damage to your car. It only covers losses suffered by others in an accident for which you are at fault.
To protect themselves while you still owe on your car, your lender will typically require you to furnish proof of comprehensive and collision insurance. These categories cover loss or damage to your auto from accidents, vandalism or theft. After your note is paid, you may choose to drop these forms of coverage. The decision must rest on your situation, the cost of the policy, and the value of your vehicle.
Uninsured or underinsured motorist coverage pays you for injuries or damages if the person causing the accident has no insurance or insufficient limits. Since the minimum liability limits are typically quite low, it is not uncommon for costs to exceed these limits. Uninsured or underinsured motorist is voluntary coverage in some states, while others require drivers to purchase it with their liability policy. Many states that do not require you to purchase it mandate that insurance companies offer it to you. If you refuse coverage, you may have to sign a waiver acknowledging that it was offered and you declined.
Personal injury protection is mandatory in some states as a modified form of no-fault insurance. This type of coverage pays for necessary medical expenses incurred by you and the passengers in your car no matter which driver is responsible. Personal injury policies are not offered by every insurance provider in all states, however.
Your deductible is the amount you must pay yourself before the insurance company will pay. This is normally limited to comprehensive and collision. Policies with higher deductibles are less expensive. However, your lender may set the maximum deductible amount you can carry.
Miscellaneous forms of coverage are optional. Replacement value options will pay the cost of the car rather than its depreciated value. This may be advisable if you bought the car with no down payment, since the depreciated value may be substantially less than the balance of your note. You can also purchase coverage to have a wrecker tow your vehicle if it is in an accident or mechanically disabled. You may also want to consider a policy that will provide you with a rental car if yours is stolen or undergoing repairs.
It is advisable to obtain an Sauto insurance quote before you select a policy. Rates vary between companies, based primarily on their past history of losses. It is important to be sure that you compare identical features, including deductible amounts and liability limits. You may want to obtain a car insurance quote from the company with whom you have your homeowners’ policy. You can sometimes save money by “bundling” your insurance policies, but this is not always the case.
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