Is Car Insurance Worth it?
Have you ever wondered if all that money you’re forking over for car insurance is really doing you any good? After all, you’re a good driver. You’ve been on the road for a few years now, and you’ve never had an accident. You’ve been involved in a few fender benders, but nothing to justify filing a claim.
What Does Car Insurance Do For You?
You invest in car insurance to preserve your financial security and your physical well-being. It only takes one accident to wipe you out for the rest of your life. With the right policy, your losses will be covered, and you’ll have peace of mind.
With that being said, many drivers are wasting money on car insurance because they aren’t making the most of their coverage options. It’s a good idea to closely examine your policy from time to time and decide whether what you have continues to serve your interests. Getting rid of the coverage you don’t need and expanding the coverage you keep can reduce your premium while increasing your level of protection.
Insurance Terms Glossary
Before taking a look at all the various car insurance options, here’s a quick rundown of some key auto insurance terms:
Premium:
This is the total amount you’ll pay for vehicle insurance every year. Payments can be made monthly, quarterly, semiannually or annually. Insurance premiums are determined by your deductibles, your age, the kind of car you have, your driving record and the policies you choose.
Deductible:
The deductible is the total amount you’ll have to cover before your insurance company pays the rest. Deductibles are different for each type of coverage, and they typically apply to every claim. If your total damages are less than the deductible, you’ll have to pay for everything yourself.
Coverage limit:
This is the maximum amount of money your insurance company will pay for each accident. The higher your limits, the more your insurance will cover.
At-fault and no-fault:
No-fault insurance laws are currently on the books in 12 states. In no-fault states, your insurance company pays the medical bills for you and your family up to a certain limit regardless of who is at fault. In at-fault states, the guilty party is responsible for the medical bills of everyone involved.
Is Your Automobile Insurance Right for You?
To ensure that you’re getting the most from your auto insurance, study the different types of coverage listed below. In addition, be mindful at the time of choosing the right auto plan. Then, go through your existing policy. Get rid of what you don’t need, maximize what you do need, and make every dollar count.
Different Types of Auto Insurance
The three basic coverage types are liability, comprehensive and collision. No one on the road can afford to be without them. There are also extended coverage and premium coverage options that offer additional protections and may make sense financially.
Liability Coverage
This insurance covers any damage you cause to people or property in an accident that’s your fault. It pays the medical bills of anyone who is injured, and it pays for damages to the other person’s vehicle. Liability coverage does not pay for injuries to you or your car.
In many states, liability insurance is the minimum coverage required to be on the road. Experts advise having at least $500,000 worth of coverage that includes bodily injury and property damage. Liability insurance is relatively cheap, so get as much as you can. If you don’t get enough, you might have to pay the rest from your own pocket.
Comprehensive Coverage
Comprehensive car insurance covers damages to your car as well as vehicle theft. Whether it’s falling tree branches, fire, vandalism, hail, baseballs, golf balls or anything else that damages your vehicle, it will be covered by your insurance company as long as it wasn’t caused by a collision. This type of coverage is relatively cheap, so get as much as you can.
Collision Coverage
With collision insurance, damage to your vehicle caused by any kind of collision will be covered regardless of who is at fault. This insurance is designed to preserve the worth of your vehicle and to protect you from having to replace or repair it yourself.
Collision insurance will also protect your auto if it’s whacked by an at-fault driver who doesn’t have enough liability insurance to cover your damages.
Three out of four drivers purchase collision coverage. However, there are exceptions. If you have an old beater that would cost you more to insure than to replace, then driving without this insurance makes a lot of sense.
Medical Coverage
Med-Pay, as it is called, covers medical expenses for you and anyone else in your vehicle regardless of who is at fault. No deductibles apply. This coverage could be a dream come true if your health insurance is not the best. However, if you have good health insurance, Med-Pay is probably not worth the expense.
Personal Injury Protection
This coverage, also known as PIP, is similar to Med-Pay. However, it has broader coverage. It also has higher limits, a higher deductible and higher premiums. Twenty-two states currently require drivers to carry personal injury protection.
Besides medical expenses, PIP covers accident-related expenses like physical and occupational therapies, childcare costs and lawn care services. It can cover up to 80 percent of lost wages, and it can pay for subcontractors if you’re self-employed. It also covers funeral expenses.
Accident Forgiveness and Minor Violation Forgiveness
This insurance can save you a lot on premiums should you have an at-fault accident or even a minor violation. One at-fault incident, even with a spotless driving record, can increase your premiums by up to 41 percent. With accident forgiveness, your driving record can be wiped clean, and your premiums will remain the same. Be advised that most insurers only allow one accident forgiveness per policy term.
Uninsured and Under-insured Motorist Coverage
Uninsured motorist insurance will cover your medical expenses should you get whacked by an uninsured driver. However, it won’t necessarily cover damages to your vehicle. Check your policy to see if the coverage includes uninsured motorist property damage. It has a lower deductible than collision coverage, and it does the same thing. You don’t need both. Under-insured motorist insurance covers the difference between how much coverage the under-insured driver has and the state’s required minimums.
Pay-per-mile Coverage
This insurance can save you some money if you don’t drive much. Rather than paying an annual insurance premium based on an estimate, a GPS device is installed in your vehicle. The device monitors your travels, and you’re only billed for the miles you actually drive.
Mechanical Breakdown Coverage
This insurance pays for repairs to your vehicle’s major mechanical systems. It’s similar to an extended warranty but covers more and costs less. With most policies, you can even choose your own mechanic.
Car Rental Reimbursement
Car rental insurance covers rental car costs while your auto is being repaired for any damages covered under your insurance policy. The coverage is good for a predetermined number of days at a predetermined daily rate.
Roadside Assistance
Roadside assistance can save the day if you’re stranded by the side of the road due to a breakdown. It covers flat tire repair, fuel delivery, battery jumps and towing costs to the nearest auto repair facility.
Guaranteed Auto Protection
GAP coverage pays the balance of your automobile loan should your car get totaled, and it’s all your fault. Comprehensive insurance only covers the current market value of your vehicle. A GAP policy takes care of the rest.
Custom Equipment Coverage
If your vehicle has high-performance parts that are damaged in an accident, custom equipment insurance can repair or replace these items. High-end stereo systems, aftermarket parts, and custom paint jobs are a few examples of what’s covered.
Original Equipment Manufacturer Parts Coverage
OEM coverage means that insurance companies cannot use aftermarket parts when repairing your vehicle. They must use genuine OEM parts that have been safety tested and were originally used to build your car.
With so many vehicle insurance options to consider, it can be difficult to decide what matters most. A good rule of thumb is to insure anything that would financially devastate you and take your chances with anything that would merely inconvenience you.
Velox Insurance represents a variety of auto insurers, so we can offer you more options that other insurance companies. Velox Insurance is available online at our website. You can also call us directly or drop by one of our branch offices to learn more.
