What is Auto Insurance? Car Insurance & Coverage?

Auto Insurance is the protection for your financial loss in the event of a vehicle accident or theft. Whether you’re buying a new car, are a new driver, or are being kicked off your parent’s policy auto insurance is something you need to start looking into.

What is Auto Insurance?

It’s probably something you’d rather avoid having to deal with, but it is required. Imagine getting into a really bad car accident. Would you be able to afford the cost of injuries and medical bills of a family that you accidentally hit? Would you be able to afford covering the cost of damages to your vehicle? Would you also be able to afford covering the cost of damages you caused to any other vehicle? Car accidents can be incredibly expensive and frustrating to deal with on your own. Having auto insurance has a purpose and you’ll be extremely thankful to have it when you have to use it.

 

Auto Insurance Basics

When you buy auto insurance, you’re essentially buying “coverages” which are different things your insurer agrees to pay for in the case that you ever get into a car accident.

Some of the most common types of coverages are:

  • Liability coverage

  • Property coverage

  • Medical coverage

  • Uninsured Motorist and Underinsured Motorist coverage

 

Breaking Down Auto Insurance

Having auto insurance will protect you against financial loss in the case of an accident. You will pay a premium, which is your monthly payment, in exchange for protection that your insurer provides. If you want to see a more detailed description about what exactly you have covered, you can find it in your insurance policy. Not having auto insurance means you would have to pay for any accidents out of pocket, and it would also put you at more risk for lawsuits. 49 states require drivers to purchase a minimum in liability auto insurance, but many drivers choose to purchase additional insurance (more than the minimum) in order to better protect themselves from any possible future accidents.

Some of these auto insurance/coverages include:

  • Liability

    This covers damage that you cause to others in an accident (it’s also the type of auto insurance/coverage required in almost every state)

  • Property

    This covers any damage or theft to your vehicle

  • Medical

    This includes coverage for treating injuries, medical bills, rehabilitation, and even funeral expenses

  • Uninsured and Underinsured Motorist

    This helps cover damages in the case that you’re involved in a car accident because of someone who has no insurance or too little insurance

As briefly mentioned before, most states require a minimum amount of auto insurance from drivers. These are some common types of required coverages:

  • Bodily injury liability

    This covers the cost of damages and medical bills in injuries you caused to another driver

  • Property damage liability

    This covers the cost of damage you caused to someone else’s vehicle or property

 

Comprehensive vs Collision Coverage

Comprehensive and collision auto insurance are two other common types of coverages. Liability insurance, which is the mandated type of insurance, doesn't cover your own car. For that reason, you should look into comprehensive and collision coverage.

Comprehensive coverage:

Comprehensive insurance covers your car from theft or any other damages as a result of something other than a car accident. This could include damage from floods, hail, vandalism, earthquakes, and more.

For example, if a tree were to fall onto your car during a storm, the damages would be paid for if you had comprehensive coverage on your vehicle.

Collision coverage:

Collision insurance covers your car in the case that you get into an accident that was your fault. This could include hitting another vehicle, hitting an object such as a pole or guardrail, and it even covers damage from potholes.

For example, if you were to back into another vehicle or object, the damages would be covered if you had collision coverage on your vehicle.


 

 

Medical Insurance and PIP

Liability insurance is a type of coverage that reimburses other people for damages you’ve caused. This insurance doesn’t cover you, though. For this reason you, you should consider medical insurance (MedPay) or personal injury protection (PIP). These types of coverage help you pay your medical bills if either you or your passengers are injured in an accident. These coverages may also help pay for funeral expenses if needed.

Differences in MedPay and PIP

  • Personal Injury Protection (PIP) is more comprehensive than MedPay.
  • MedPay is strictly for paying medical expenses that are a result of a car accident.
  • Personal Injury Protection (PIP) includes benefits for lost wages and services.
  • Personal Injury Protection (PIP) is required in most states while MedPay is less commonly required.

 

Uninsured and Underinsured Motorist

Unfortunately, there will always be some people that drive uninsured. This is a problem because if they were to cause a car accident with you, they most likely would not have the money to pay for the damages they caused. To prevent an even more complicated and more expensive situation like this, you should consider uninsured motorist (UM) coverage. This coverage helps cover the expenses of medical bills if you were to be injured in an accident that was caused by an uninsured driver.

Another similar type of insurance is underinsured motorist (UIM) coverage. This type of insurance helps pay for your medical bills if the other driver who caused the accident doesn’t have enough insurance to cover the damages caused.

 

Auto Insurance Extras

Rental Reimbursement Coverage

this coverage helps pay for your rental car in the case that your personal vehicle is damaged.

Towing Insurance

this coverage will help pay for the expense of getting your vehicle towed if you can’t get it to a mechanic shop. It usually also covers the expense of a battery jump or getting a flat tire changed.

Gap Insurance

this insurance is sometimes also referred to as an “umbrella rider”. This coverage helps pay for the difference between the actual value of your car, and the remaining balance on your loan if you have one. If you owe more on your vehicle than what it’s actually worth, your insurer will pay this in the case that you get into a car accident.

 

Deductibles

Your deductible is how much you will pay out of pocket before your insurer pays the remaining cost of damages. For example, if you have $4,000 worth of damages on your vehicle and your deductible is $1,000, you would personally pay the $1,000 before your insurer pays out the remaining $3,000. The higher your deductible is, the lower your premium will be. Though a lower premium sounds nice, this also means you’ll probably end up spending more out of pocket if you were to get in a car accident.

 

How Auto Insurance is Priced

Before your insurer gives you a price on auto insurance, they consider many factors. They are trying to figure out how likely you are to get into an accident and how much that accident would cost. Some of these factors include whether your a safe driver, speeding tickets, your car’s value, and even your age.

Safe Driver

If you’ve never been in an accident, insurers are more likely to believe you won’t get into one in the future.

If you’ve had accidents in the past, insurers see a higher possibility of you getting into another accident in the future, and may give you higher rates.

Speeding Tickets

No speeding tickets means you probably drive slower than most people, which in turn means you’re less likely to get into an accident.

If you have many speeding tickets on your record, insurers may view you as a reckless driver and give you higher rates after assuming you’re more likely to get more in the future.

Car’s Value

The less expensive and older your car is, the less expensive it will be to repair in the case of an accident.

If your vehicle is more expensive or newer, you may get higher rates because the cost of repairs will be more than average.

Age

The older you are, the more experience you probably have driving. As you get older, your rates will begin to decrease.

When you were a teenager who was just learning and was just beginning to drive on your own, you had less experience driving, and were more likely to get higher rates.

Location

Yes, sometimes even location is a deciding factor. If you live in a very highly populated area, you’re more likely to get into a car accident than if you were to live somewhere less populated.

 

How to Buy Auto Insurance

Buying an auto insurance policy has become an incredibly easy and simple process. It’s even possible to get it issued within the same day of applying. Here are the steps you should take to begin the process of buying your very own auto insurance:

  1. Get a free quote
  2. Fill out an application
  3. Wait to be approved
  4. Sign your new policy!

For an even easier, stress-free process, talk to a representative from Phoenix Protection Group. They’ll help answer any questions you may have, and will even help you fill out your application if needed. It’s really not a difficult process, especially with the help of trained and knowledgeable agents who are only one phone call away!

Auto insurance is something that all drivers need. It shouldn’t be something that you dread having to deal with. So whether you’re a new driver, are buying a new car, or are separating from your parents insurance, make sure to call Phoenix Protection Group so that you can talk to an agent and get your free auto insurance quote today.