Basic Coverage can do many important things
basic coverages can help in the wake of an accident against lawsuits, bills, and repairs.
This coverage applies to injuries that you, the designated driver or policyholder, cause to someone else.
It’s very important to have enough liability insurance, because if you are involved in a serious accident, you may be sued for a large sum of money. Definitely consider buying more than the state-required minimum to protect assets such as your home and savings.
CAR POOLING & LIABILITY
Drivers involved in car pools and other group arrangements of transporting individuals may wonder if the situation is covered under their auto policy. This concern is valid as many auto policies have restrictions with the intent to exclude the use of a personal auto for transporting people or property for income. However, this exclusion does not affect coverage for car pool, driver group, or share-the-ride arrangements.
If you finance or lease a vehicle, you may need to add gap insurance coverage to your auto policy. The bank or leasing company may also require gap insurance. This refers to the fact that if you have an accident, and your leased car is damaged beyond repair or totaled, there’s likely to be a difference between the amount that you still owe the auto dealer and the check you’ll get from your insurance company. That’s because the insurance company’s check is based on the car’s actual cash value which takes into account depreciation. The difference between the two amounts is known as the “gap”.
Some lease companies may offer to include the cost of gap insurance with the lease payments. You don’t actually buy a gap policy. Generally, the auto dealer buys a master policy from an insurance company to cover all the cars it leases and charges you for a ìgap waiver. This means that if your leased car is totaled, you won’t have to pay the dealer the gap amount. Check with the auto dealer when leasing your car.
If you have an auto loan rather than a lease, you may want to buy gap insurance to protect yourself from having to come up with the gap amount if your car is totaled before you’ve finished paying for it.
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MEDICAL PAYMENTS (PIP)
This coverage pays for the treatment of minor injuries obtained during an auto accident involving the policyholder’s car.
PROPERTY DAMAGE LIABILITY
This coverage pays for damage you (or someone driving the car with your permission) may cause to someone else’s property. Usually, this means damage to someone else’s car, but it also includes damage to other property such as fences, buildings and other structures.
This coverage pays for damage to your car resulting from a collision with another car, object, or a rollover. Collision coverage is generally sold with a deductible of $250 to $1,000 the higher your deductible, the lower your premium. Your collision coverage will reimburse you for the costs of repairing your car minus the deductible.
This coverage reimburses you for loss due to theft or damage caused by something other than a collision with another car or object, such as fire, falling objects, missiles, explosion, earthquake, windstorm, hail, flood, vandalism, riot, or contact with animals such as birds or deer.
Comprehensive insurance is usually sold with a $250 to $1,000 deductible, though you may want to opt for a higher deductible as a way of lowering your premium.
Comprehensive insurance will also reimburse you if your windshield is cracked or shattered. Some companies offer glass coverage with or without a deductible.
States do not require that you purchase collision or comprehensive coverage, but if you have a car loan or a lease, your lender may insist you carry it until your loan/lease is paid off.
When renting a car, you need insurance. If you have adequate insurance on your own car, including collision and comprehensive, this may be enough.
Before you rent a car:
Contact your insurance company
Find out how much coverage you have on your own car. In most cases, the coverage and deductibles you have on your personal auto policy would apply to a rental car, providing it’s used for pleasure and not business. If you don’t have comprehensive and collision coverage on your own car, you will not be covered if your rental car is stolen or if it is damaged in an accident.
Call your credit card company
Find out what insurance your card provides. Levels of coverage vary. If you don’t have auto insurance, you have two choices: you can buy coverage at the car rental counter, or you can purchase a non-owner auto liability insurance policy.
Rental car counter insurance
Rental car counter insurance can provide the following coverage:
Collision damage waiver (CDW)
Sometimes called a loss damage waiver (LDW), this coverage relieves you of financial responsibility if your rental car is damaged or stolen. The CDW may be void, however, if you cause an accident by speeding, driving on unpaved roads, or driving while intoxicated. This coverage generally costs between $9 and $19 a day. Our agency strongly recommends this coverage.
This provides excess liability coverage of up to $1 million for the time you rent a car. Rental companies are required by law to provide the minimum level of liability insurance required by your state. Generally, this does not offer enough protection in a serious accident. If you have adequate liability coverage on your car or an umbrella policy on your home/auto, you may consider forgoing this additional insurance. It generally costs about $9 to $14 a day. If you don’t own a car, and rent cars often, consider purchasing a non-owner liability policy.
Personal accident insurance
This provides coverage to you and your passengers for medical/ambulance bills. This type of insurance usually costs about $1 to $5 per day, but may be unnecessary if you are covered by health insurance or have adequate medical coverage under your auto policy.
Personal effects coverage
This provides coverage for the theft of personal items in your car. However, if you have homeowners or renters insurance, you may be covered for items stolen from the car, minus your deductible. You need to have receipts or other proof of ownership. This type of insurance usually costs about $1 to $4 per day.
Non-owned auto liability insurance
Instead of buying liability coverage from the car rental company each time you rent a car, you can purchase a non-owner auto liability insurance policy from an insurance company which might be cheaper if you rent frequently.
A non-owned auto insurance policy covers you for damage you may cause to someone else’s car and liability for injuries to its occupants, or to pedestrian, in the event of an accident. The policy will also provide medical payments and coverage for you and your passengers. If required by the state underinsured and uninsured coverage would be included.
However, non-owned auto insurance does not provide collision coverage. Collision coverage pays for damage to the car you’re driving if you crash into another car or object or the car rolls over. You have to buy this from the car rental company. However, some credit cards provide collision coverage if the rental car is paid for with the card or check with your credit card company first.
Note: If you’re renting a car abroad, you may need an international drivers license.
UNINSURED & UNDERINSURED MOTORIST
Uninsured coverage will reimburse you, a member of your family, or a designated driver if one of you is hit by an uninsured or hit-and-run driver.
Underinsured motorist coverage comes into play when an at-fault driver has insufficient insurance to pay for your total loss. This coverage will also protect you if you are hit as a pedestrian.
Most personal auto policies provide coverage for driving in Canada. However, we recommend that you check with us before taking your car across the border.
Mexican law requires that you purchase separate liability coverage from a Mexican insurance company prior to operating your vehicle in Mexico. Your personal auto policy may provide some limited coverage but this coverage must meet the insurance requirements of the Republic of Mexico. Failure to purchase the proper Mexican liability insurance could result in a substantial fine if you are involved in an accident while driving in Mexico.
We suggest that you check with our office prior to driving in any other country.
In most cases, if the vehicle pulling the trailer is covered under the policy, the liability coverage will be extended to the trailer if you own the trailer. However, physical damage (comprehensive or collision) must be purchased separately. You will need to review your policy for exceptions.
More Auto Insurance Links
Driving without basic auto insurance is illegal in almost all states. Basic Auto Insurance not only protects you financially, it is considered a social responsibility. Driving without it or the ability to pay for the damages you cause in an accident puts others at financial risk.
Have you ever had a question about your auto insurance? We are here to answer your questions and help you make important decisions to be certain that you are properly protected.
Frequently people go for years without reviewing their insurance program, even though life quickly changes. By answering a few questions, you can have the peace of mind knowing that your family and possessions are protected.