Auto Insurance: What You Need to Know

Automobile insurance needs are not the same for all vehicles, all drivers or all budgets. Most states require a minimum (specified amount) of liability insurance to protect third parties if damage or injury occurs at your hand but beyond that, you have some flexibility for the amount and kind of coverage you choose.

What Auto Insurance is Right for You?

An analysis of your vehicles, finances and drivers will help your agent tailor a policy to your specific needs and situation. You should not assume that your auto policy will pay for every potential predicament. Familiarize yourself with the terms of your insurance so you can be confident in the help that you will have access to, should you need it.

Common Types of Automobile Insurance

Liability Coverage is insurance that covers the body and property of other individuals in accidents for which you are culpable.

Bodily Injury Liability pays for medical bills and legal defense (up to the limits stated in the policy) if your actions cause injury or death to other people. The kinds of bills that would be covered are things like hospital bills, rehabilitation, ambulance fees, prosthetics, funeral expenses.

Property Damage Liability covers damage done to other people’s property, such as their vehicle, home, fence, etc. Liability coverage will NOT cover the medical bills or damaged vehicle of the insured.

Collision Coverage pays varying amounts for the insured’s vehicle if it is involved in a crash, up to the limits stated in the policy and after the deductible has been paid. The amount that an insurance agency will pay if the car is totaled will be determined by the wording of the policy. Collision coverage will not pay for third party property damage or anyone’s medical expenses.

Comprehensive Coverage pays varying amounts for non-collision events such as damages that occur from certain severe weather events, encounters with animals, vandalism or theft. These sorts of incidents are out of the vehicle owner’s control – a hail storm denting the car hood, a moose running in front of your car on the highway a miscreant stealing the tires off of your car, etc. As with collision, a deductible will have to be paid before the insurance kicks in and the amount that will be paid will be determined by the terms of the policy.

Actual Cash Value indicates that the amount paid out for an unrecovered theft or a totaled vehicle will be determined by the insurer. The insurer might determine the value by referring to value websites such as KBB or they may look at local sales of the same vehicle and then subtract for depreciation. This is going to be the least expensive option which may be the best option for your finances but it will leave you at the mercy of the insurer, so you have to weigh all the options.
Stated Value coverage has the insured price their vehicle for their policy. If the car is totaled or stolen, the insurance agency will pay the least of either the repair costs, the actual cash value or the value which the insured provided at the time the policy was written. If you undervalue your vehicle to lower the premium, you will be limiting the payout if it is needed.

Agreed Value may be a costlier option but it provides you with peace of mind. With this type of policy, the insured and the insurer will agree on the value of the vehicle and an exact dollar amount will be written into the terms of the policy. If a calamity occurs that requires a payout, you will already know exactly how much the insurance agency will be paying you.

OEM Parts awkwardly translates to original equipment manufactured or original factory parts. When a vehicle is damaged or totaled requiring insurance to step in, the insurer is not required to pay for OEM parts to be used unless the policy specifically states otherwise. If OEM parts are not used, what is? That depends on the garage and if they have a relationship with the insurance agency or you. They may use refurbished parts, after-market parts or generic brands. Generic brands may work just fine but if you have a foreign or luxury vehicle, you may want original factory parts.

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Other Coverage Options

Uninsured or Underinsured Coverage is essentially just what it sounds like. If you get hit by a drive that does not have insurance or does not have enough insurance to pay for full amount to repair or replace your vehicle, this coverage will step in and pay the balance. A deductible may have to be paid before this insurance covers costs.

Medical Payments Coverage pays for the ambulance fees, hospital fees, rehabilitation as well as funeral costs for the driver and passengers regardless of who is at fault in the accident.

Basic Reparations Benefits (BRP) or Personal Injury Protection (PIP) pays for medical cost, income cost and essential services cost. What this means is, not only will some portion of the medical costs, but some part of the insured’s weekly income and money to pay for certain household and personal duties that cannot be performed due to injuries sustained in a covered accident.

Full Glass Coverage is insurance that will pay for any broken window on your vehicle without requiring you to pay a deductible first.

Replacement Vehicle Coverage is a policy that pays to replace a vehicle that is lost or stolen without deducting for depreciation.

Call us for a free estimate (203) 769-9565

For whatever kind or amount of automobile insurance you need, we will provide insurance experts to help guide you through the process so you can choose the appropriate policy for your needs and financial situation.