As an automobile owner, you should carry the right auto insurance coverage; however, finding the right coverage may be difficult, especially if you lack the necessary product knowledge. Auto insurance coverage comes in many different forms. Some policies only cover your car repair/replacement costs, while others cover third-party property damage, particularly if you’re the at-fault driver. Additionally, some policies only cover certain perils.
Here’s a quick consumer’s guide to car insurance in 2021.
Why is Auto Insurance Essential?
1. To comply with the Law
According to the National Association of Insurance Commissioners (NAIC), most states across the U.S. have specific auto insurance requirements. Therefore, before you purchase a car insurance policy, you should first contact your state’s insurance department to learn more about your state’s auto insurance requirements. Alternatively, you can get this information from a reputable insurance agent such as Knight Insurance Services located in La Canada Flintridge.
2. To Fulfill Your Lender’s Requirements
Car loan lenders typically require borrowers to get auto insurance coverage. If your insurance lapses, your lender will typically insure your car; however, the premiums will likely be higher and the policy’s coverage much less. The lender may demand that you pay higher premiums until you have your own insurance plan.
3. Shield Your Assets
Most states require motorists to carry a minimum amount of auto liability insurance coverage to cover third-party property damage and bodily injuries. Additionally, if a car crash leads to a lawsuit, liability insurance also covers the resulting legal costs. However, to ensure adequate coverage and protect your assets, insurance experts normally recommend that you carry more than your state’s minimum auto liability insurance coverage requirement.
Types of Auto Insurance Coverage
1. Coverage Required by Most States
• Bodily injury liability – This type of coverage covers third-party bodily injuries when driving either your own car or a borrowed car with the owner’s permission. Take note that you can add members of your household to your policy as named drivers.
• Property damage – This covers third-party property damage, including vehicles, structures, and other objects.
2. Coverage Required by Some States
• Underinsured and uninsured motorist coverage – These compensate you when the at-fault driver either lacks adequate insurance coverage or has no auto insurance coverage.
• Personal Injury Protection (PIP) or medical payments – This covers the medical bills of both the driver and the passenger(s) involved in a car crash. It is worth noting that PIP is no-fault coverage, meaning it doesn’t exclude at-fault drivers. It may also cover funeral costs and lost wages.
3. Coverage Required by Auto Loan Lenders
• Collision – This coverage reimburses you for the damage to your vehicle that results from colliding with an object, a pothole, another vehicle, or from toppling.
• Comprehensive – This coverage compensates you for any damage to your vehicle that doesn’t result from a collision. It includes damage from windstorms, fire, flood, hail, hitting animals, and theft. Comprehensive coverage also pays for any damage to your windshield.
Many insurers also offer other variants of coverage, like a policy that pays for a rental car whenever your automobile is disabled or in need of towing.
No-fault – If you reside in one of the no-fault states, your insurer will pay you and your passengers’ medical bills regardless of who’s to blame for the accident. In many of the no-fault states, you can sue the driver who is at fault if you sustain serious injuries. You still must file a claim with the insurance company of the at-fault driver to be reimbursed for the damage to your car.
What Determines Your Auto Insurance Premium
Regarding auto insurance, a premium is the cost of a policy, which is typically paid in installments such as monthly, semi-annual, or annual installments. Some of the factors that determine the cost of a policy include:
• Coverage – Your premiums will be determined by the type of coverage and the amount of coverage you buy.
• Deductible – Higher deductibles attract a higher premium.
• Car model and type
• Age and gender (except in states where the use of gender and age is prohibited)
• Driving record
• Marital status
• Homeownership status (except in California)
• Miles driven
• Credit score (except in Massachusetts, Hawaii, and California)
How to Reduce Your Car Insurance Premiums
When shopping for insurance, you should aim to get adequate coverage without overpaying. Here is what you should consider.
• Increase your deductible but make sure you’re capable of paying the deductible.
• Choose the right car. Some cars attract higher premiums than others. Get information on the insurance cost for given vehicles from Insurance Institute for Highway Safety (IIHS).
• Bundle your insurance policies. Most insurance companies will give you a discount if you buy auto insurance for multiple cars or if you bundle your auto with other types of coverage like life insurance or homeowners insurance.
• Ask for discounts.
Auto Insurance Policy Requirements.
To purchase auto insurance, you need to provide your driver’s license, your car’s registration, model and make, year, odometer reading, vehicle identification number (VIN), individuals who’ll be driving the car, the number of miles you drive annually, and your home address.
If you’re shopping for auto insurance coverage, keep this guide to car insurance handy. Do you have additional questions about your auto insurance in La Canada Flintridge? If so, then contact the experts at Knight Insurance Services. We are ready to assist you with all your coverage needs today.