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Accidents happen, and insuring yourself and your vehicle is extremely important. Auto insurance is mandatory in 49 states, excluding New Hampshire. When choosing a policy, there are many options to find the right policies best suited for you.

What is the Purpose of Auto Insurance? 

Simply put, auto insurance is there when you or another driver cause damage or injury. Additionally, it can cover medical expenses to drivers and passengers, car maintenance, and damage your vehicle might have done to someone’s property. Purchasing auto coverage may seem like a waste of money, but it is crucial for your safety and other drivers. 


Car with hands over car protectively hovering

Many insurance agencies offer discounts for a variety of reasons. Students with good grades, bundling policies, low mileage, safe drivers, seniors, or insuring multiple cars are just a few ways to qualify for a discount. Other variables that influence auto coverage prices are lease and rental terms, state requirements, and states that require no-fault coverage. There are currently 12 no-fault states that require drivers to have personal injury protection (PIP) to protect themselves. Furthermore, your demographics, driving record, and vehicle model will all influence auto insurance prices. 

Types of Auto Insurance

The same variables that influence your auto insurance rate will also affect your policy needs. For example, a family with new drivers may choose to add on more coverage to protect their family in the case of an accident. This may even include adding a Personal Umbrella Policy to increase liability protection to $1 million or more. However, a more experienced single driver with very low annual mileage might choose to have less coverage.  

No-Fault Policy (Personal Injury Protection)

Personal injury protection covers the medical expenses caused by a motor accident for the driver and passengers. Unlike auto liability coverage, PIP requires drivers to protect themselves regardless of who is at fault. Therefore, if the individual has to take time off work, requires treatment, or other consequences from an accident, PIP will cover it. Having a no-fault policy can also speed up the process of your claim and helps prevent lawsuits. In addition, some states have recently started to change their PIP laws to help lower insurance costs for consumers by limiting the number of damages from an unlimited lifetime to a cap on dollars and timeframes. 

Bodily Injury Liability

Bodily Injury Liability coverage is mandatory in most states. Bodily injury liability coverage pays for medical expenses, lost income, and legal fees of the other driver, their passengers, and pedestrians when you’re found liable. States determine the minimum bodily injury liability coverage drivers must-have. It is recommended to purchase more than the minimum in case the injuries surpass the amount of coverage. In that case, you would then be expected to pay out of pocket. In addition, states have a maximum amount of compensation the other driver can receive if they lost their income due to their injuries. Injured parties will typically sue to get a judgment against you for injuries, loss of income, and pain and suffering that exceeds your coverage limit. In some states, the courts will garnish your wages for up to 25% of your gross income for up to 20 years to pay these judgments off. Therefore, taking higher limits is always a good idea.

Property Damage Liability 

Man kneeling down to inspect car damage with clipboardProperty Damage Liability coverage is mandatory in most states. As opposed to no-fault coverage, property liability coverage will pay for damages that you may cause in an accident determined to be your fault. It helps the driver at fault pay for the other driver’s expenses to fix their car. It will also pay for damages to structures that may be struck by the driver or a car they hit during the accident. Property liability does NOT cover damages to the at-fault driver’s vehicle or their medical expenses. Liability is the most important auto coverage because you have no control over the type, number, or value of cars you may damage in an at-fault accident. Property damage to a building, structure, or business can add up very quickly and is part of this coverage. Consumers should spend time with their agents to ensure that they always have the right level of liability protection. 

Collision Coverage

Collision coverage is not typically required unless you are financing or leasing your vehicle. Collision insurance protects your car in accidents, such as hitting or being hit by another vehicle or object and single-car accidents. It does not cover any medical expenses or the other vehicle involved. While this insurance coverage is not required for cars that are not financed or leased, it is highly recommended that consumers carry it on newer cars, where the damages can be expensive to repair. The cost of the plan and deductible depends on the age and model of the vehicle and the driver’s record. 

Comprehensive coverage

Comprehensive coverage is required if you are financing or leasing your car. Unlike the other insurance plans, comprehensive insurance does not cover any collision or medical expenses. Rather it helps cover damages due to weather, fire, and theft. Depending on your plan, you may be required to pay a deductible before your insurance covers the rest of the expenses. For example, glass chip repairs are typically deductible-free, but full windshield/window replacement requires any deductible to be paid. Consumers can usually select deductibles from $0 to $1000. However, the higher deductibles are not that much cheaper, and $1000 is a big out-of-pocket expense for most of us. 

Uninsured Motorist Coverage

While driving uninsured is against the law, it is relatively common to come across uninsured drivers. In some areas, the Department of Motor Vehicles puts the number of uninsured drivers well over 20%. Think about that. Two, or more, vehicles out of every ten that you dive with may have NO insurance coverage. If you were to be hit by an uninsured driver, Uninsured Motorist (UM) coverage would cover your vehicle damage and necessary medical expenses, up to the limit of your Uninsured Motorist coverage limit. Suppose you do not have uninsured motorist coverage. In that case, you will have to pay out of pocket for all the necessary expenses and then file a civil suit against the other driver to recover your costs.  You could end up with only a judgment against them in many cases, and only pennies on the dollar recovered. You could work without income for months, and your bills can pile up quickly. Most insurance carriers will allow you to match the UM coverage limit to your select bodily injury limit. Even if you have an excellent long-term disability and health insurance, it is recommended you still consider uninsured motorist coverage.

Don’t Know Where to Start? 

Are you looking for the right auto insurance plan that fits your lifestyle? Home & Auto Resources wants to provide you with the resources and knowledge to ensure you are properly insured. Contact Home & Auto Resources at (888) 535 – 2762 for all your home and auto needs!


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