What Types of Auto Insurance Do You Need?

Car insurance protects you and others involved in an accident as well as your vehicle. It consists of several coverages including liability, comprehensive, and collision. Liability coverage is required in most states.

The comprehensive portion of auto insurance helps pay for damage to your vehicle caused by incidents that aren’t part of a collision with another car or object. It covers events such as theft, natural disasters (like hail or floods), vandalism, hitting an animal and other unforeseen perils. Like collision coverage, comprehensive also has a deductible you’re responsible for before your policy kicks in. Visit https://www.nicholsoninsurance.com to learn more.

The cost of comprehensive coverage may vary based on the value of your vehicle, where you live and other factors. Some insurance professionals recommend choosing a higher deductible to lower your premiums; however, if you choose a deductible that’s too high for you to comfortably afford paying in the event of a claim, this could make comprehensive coverage unnecessary.

Most states require drivers to buy liability car insurance, but many people also choose to add comprehensive and collision insurance to their policies. These two types of coverage help fill in the gaps left by liability coverage, which only covers your financial responsibility for damage you cause to other people or their property and collision insurance, which pays for your car’s repair costs when it is involved in a collision with another vehicle or object.

If you lease or finance your vehicle, your lender will usually require you to purchase comprehensive and collision car insurance. This is because they technically own your vehicle until it is paid off, and they want to protect their investment.

While comprehensive insurance isn’t required in most states, it can be a good idea if you drive a valuable or custom car, or if your lender requires you to carry it as a condition of financing or leasing your vehicle. In addition, comprehensive insurance can be a good choice if you are in an area prone to natural disasters or if your vehicle has a lot of depreciation. If you are concerned about whether or not comprehensive insurance is worth the extra expense, calculate your vehicle’s current cash value using resources such as Kelley Blue Book and estimate how much you would be willing to pay out of pocket to replace it in the event of an accident or other covered loss.

Collision Coverage

Collision coverage helps pay for repairs to your car when it hits another vehicle or stationary object, such as a fence, tree or utility pole. It also pays for damage from driving into a ditch or rolling over your car. This is a common type of auto insurance coverage and often required if you’re leasing or financing your vehicle, though this may vary by lender. Like other types of auto insurance, collision coverage has a deductible, which is the amount you need to pay before your policy starts paying on a covered claim. You can typically choose the size of your collision deductible, and higher deductibles generally result in lower premiums.

While collision car insurance is not always necessary, it does make sense for some drivers. For one, it’s often a requirement if you’re leasing or financing your car, as the lienholder wants to protect their investment in case of an accident. If you own your car outright, however, you might want to consider it to help cover the cost of repairing or replacing your vehicle in the event of an accident.

The other benefit of collision insurance is that it covers your car regardless of who was at fault in the crash. This is important because oftentimes it can take a while for the other driver’s insurer to investigate the crash and determine who was at fault, and then it may be difficult to get your own car fixed quickly.

When choosing collision car insurance, it’s also important to keep in mind that the value of your vehicle depreciates over time. If you have a newer vehicle that’s still worth a significant amount, collision insurance may be a smart investment for you. You can typically add gap insurance to your collision policy, which will help cover the difference between what you owe on the car and its actual cash value in the event of a total loss.

Other factors that might influence whether or not you want to buy collision insurance include your ability to pay for repairs or replacement out of pocket, and whether the vehicle is in storage for a period of time (like an RV or boat). You may also be able to receive discounts on your collision car insurance if you have other policies with the same company, drive less than a certain number of miles per year, are a safe driver, or have safety devices installed in your vehicle, such as airbags or anti-lock brakes.

Uninsured/Underinsured Motorist Coverage

When you’re in a car accident, the driver responsible for the wreck should have liability insurance to pay for your medical bills, vehicle repairs and other costs associated with the crash. However, uninsured/underinsured motorist coverage can help fill in the gaps if the at-fault driver doesn’t have any insurance or doesn’t have enough to cover your damages. Most auto policies include uninsured/underinsured motors coverage, or UM/UIM, as an add-on or a standard part of the policy. Some states require this type of coverage, and even if it’s not required in your state, you may want to consider adding it to your car insurance policy for extra peace of mind.

UM/UIM usually consists of two parts: bodily injury and property damage. When you file a claim for uninsured/underinsured coverage, your insurance company will first check to see if the at-fault driver has any insurance. They can do this by asking for proof of identity and the license plate number of the involved vehicles, which will let them know if the drivers have insurance or not. Typically, your insurer will also ask for the contact information of any witnesses to the car accident, as they might need their testimony later on.

Once they’ve verified that the at-fault driver doesn’t carry any insurance, your UM/UIM policy will kick in to pay for your injuries and other expenses related to the crash. Your UM/UIM coverage can be used to cover your own medical bills, property damage and other costs associated with the accident, but it can also help you get compensation for losses such as lost wages and pain and suffering.

If you have a lot of assets, you may want to consider increasing the limits on your UM/UIM coverage. This will increase your premium, but it could save you from having to shell out some of your own money if the at-fault driver causes an accident that you’re not at fault for. Some states and insurers allow you to “stack” your UM/UIM limits on multiple cars, which can also help raise the overall limit. But the best way to determine how much UM/UIM coverage you need is by talking with an experienced auto insurance agent.

Liability Coverage

Most states require that you have a minimum of bodily injury liability and property damage liability coverage to legally drive your car. These two types of coverage reimburse others for their losses associated with an accident you cause, up to predetermined limit amounts. Bodily injury coverage includes medical expenses for drivers and passengers, while property damage coverage pays for repair or replacement of other vehicles and structures, like fences or mailboxes, minus your insurance policy’s deductible.

In addition, New York state law requires that you carry Personal Injury Protection (PIP) or medical payments coverage to cover you and your family’s medical expenses, lost wages and other costs related to an accident, regardless of who caused the crash. This type of coverage is typically included in your basic auto policy or can be added to it.

Your insurance company may also include additional coverage options in your policy, such as roadside assistance, towing and rental reimbursement. You can also choose a higher deductible in exchange for lower premiums, but you should consider how much of that deductible you could comfortably afford to pay in the event of an accident.

While most car owners only need liability coverage to operate their vehicle, you can increase your protection by adding collision and comprehensive insurance policies. You can also purchase supplemental coverage for your personal items in the vehicle, ride-sharing insurance to extend your coverage if you use your car for Uber or Lyft and gap insurance to cover the difference between what you owe on your car loan/lease and the actual value of your vehicle in the event it is totaled.