Auto Insurance

Auto insurance to the majority of people is protection of damage to their vehicle if they are involved in an accident, but in reality there is much more to auto insurance than that.

In addition to coverage for damage to your vehicle, there is also coverage for injuries that result in auto accidents, damage to property caused by a vehicle, protection for other drivers who damage or injure you are un-insured or under-insured, and more. Each piece of coverage is very important, and having the right amount is key to protecting your finances. Let’s take a moment to break down the types of coverage auto insurance provides.

Major Coverages

  • Comprehensive Coverage
    • This coverage helps replace your vehicle if it is total by something outside of your control such as storms, theft, hitting an animal, fires, etc.
      • Example: You go into the grocery store to get meals for the week, and your car is stolen from a parking lot while you are inside shopping. You insurance will pay for the replacement of the vehicle.
  • Collision Coverage
    • Collision pays for the replacement of your vehicle, regardless of fault, if you are involved in an auto accident. This is the most typical thing people think of when they hear “auto insurance”.
      • Example: Your newly licensed teenager backs their car into a cement pole causing $5,000 of damage to the vehicle. Your insurance would pay for the repair of the vehicle (minus the deductible in place)
  • Liability Coverage
    • If you are driving and damage another vehicle or injure another driver liability coverage pays for the replacement or damage to the vehicle, and also medical bills in the case of injury. In addition, liability coverage can also pay for any potential court/attorney fees that may come from an auto accident that is your fault.
      • Example: Icy roads cause your vehicle to slide while trying to stop, and you run into the back of the vehicle in front of you damaging the vehicle, and injured the driver.
  • Medical Payments (Bodily Injury)
    • This piece of auto insurance covers the medical bills of you, your family, or any other passengers in your vehicle that are injured in an auto accident, regardless of fault. Having this part of your auto insurance is very important because medical bills are costly, and you want to be financially protected.
      • Example: You are driving your child to soccer practice, and are involved in an accident. Due to an injury your suffer you have medical bills of $2,000. Your policy will pay for the medical bills up to the limits outlined in your policy.

Other Coverages

  • Loan/Lease Payoff (Gap Coverage)
    • Auto insurance is specific to the needs of each person, and if you lease your vehicle or own vehicle that has a loan on it you need protection if the car is totaled. This type of coverage is also known as gap insurance or gap coverage in the auto insurance industry, and can be very important. Depending on the company and policy you choose coverage for loan or lease payoff can be 100% or more (more is needed for depreciation of brand new vehicles). If your vehicle is totaled in an accident the insurance company will pay off the loan or lease in so you are able to buy another vehicle.
      • Example: You purchase a brand new vehicle and finance it for $20,000, and the moment you drive it off the lot it depreciates by $2,000. Your car is totaled a week later and the cash value of the vehicle is now only $18,000, but your loan is still $20,000. Your gap coverage will pay the additional $2,000 of depreciation so your loan is paid in full.
  • Rental Car Reimbursement
    • In the event your car is total or damaged there will be a period of time where you need another vehicle until you can replace your vehicle or wait for repairs to be completed. Rental car reimbursement will help pay for a rental car in this limbo time between replacing your vehicle or waiting for repairs to be completed. Many people do not encounter this situation often so they do not think about this as part of the scenario. Having this coverage in place can help save hundreds of dollars on a rental car that you would have to pay for in full otherwise. You still need to make it to work, pick the kids up from school, and go to your karate class if your car is totaled or damaged.
      • Example: You are in a fender bender on your way to work which requires you vehicle to be repaired. The repairs are supposed to take a day, but after examining the auto repair shop finds out the issue is bigger than first expected, and the repairs will now take a week. You insurance company will help pay for a rental car for the number of days outlined in your policy.

Applying For Auto Insurance

Once you find the policy coverage you need and the insurance company you want to go with the next step is to fill out the application, and get the approval process started.

The insurance company will examine your application, and determine your policy premium price based on the rating they determine you to be in. The following variables are what auto insurance companies use to determine your rating:

Driving History- Your previous history of auto claims the insurance company will determine the amount of risk you present. This is one of the largest factors to rating, because if you show a past of traffic violations, accidents and other claims you then prove to be higher risk. On the flip side, if you have a very low history of risk you generally have a better rating.

Age- Another big factor is your age. For the majority of insurance companies, drives under the age of 25 and over the age of 65 will have higher rates based on statistical backed evidence of a higher frequency of claims, etc.

Credit- The higher your credit score the better. Insurance companies nationally have now implemented credit as part of the rating factors.

Type of Vehicle- Different ratings are assigned to different vehicles. Some of the main factors that an insurance company take into account are safety features, engine size, size of the vehicle, and vehicle type.

Family/Household- Another factor insurance companies take into account is your household. Insurance companies will take into account the number of people in your household, and their age to determine risk on a household level. Generally, if there are a number of people under age 25 or over age 65 the rating of everyone in the household will be affected.

Get the Process Started

Our agents can help you search and compare multiple auto insurance companies to help you find the right coverage you need based on your unique needs.

We used a quoting tool that will help you decide which company to go with after we determine the right coverage you need to protect your vehicles.

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