Just Buy What You Need

couple making insurance coverage decisions

You have been seeing a lot of advertisement lately for buying just the car insurance you need. The ads leave you with the feeling you have a lot of control as to what you should be carrying and the feeling there is a lot of savings to be made by customizing your coverages. 

What are you really able to control when it comes time to choose your insurance coverages? The answer to this question hinges a lot on the requirements of the State you reside in. Visit https://www.insuranceguidelocal.com/tort-at-fault-insurance-and-no-fault-insurance-whats-the-difference/ for a detailed listing of tort and no-fault insurance states. So, if you reside in a no-fault state you must carry personal injury protection policy since each involved driver covers his/her own medical expenses. If you’re in a tort state, you must carry the minimum dollar amount established by the state to indemnify the party injured or property damaged. There are some states where you can opt out of uninsured/ underinsured motorist coverages, otherwise this becomes a mandatory requirement. You need to check with your insurance agent to determine what is and what isn’t required in your state.

Having said all that, here are some items you get to choose from in tort states when customizing insurance coverages: 

  1. Bodily injury limits: Dollar amount your insurance will pay in the event you do bodily harm to another individual.
  2. Property damage limits: Monetary limits payable if you do physical damage to another’s property.
  3. Medical: Amount your policy will pay for your medical expenses if you are at fault in an accident.
  4. Uninsured Motorist: Amount of money your company will pay to reimburse you for medical expenses you incur when injured by another person who has no insurance.
  5. Underinsured Motorist: If the offending party is underinsured for medical expenses you incur from an accident, this coverage is activated to the amount purchased.
  6. Accidental death and dismemberment: Set amount paid by the insurer if the insured dies solely as a result of bodily injury caused by an occurrence while occupying or if struck by a motor vehicle. If dismemberment, policy will schedule how much will be paid for dismemberment.
  7. Additional Living Expenses: If you are a certain number of miles away from home and have a breakdown, the company will reimburse you up to a certain amount found on your declaration page for hotel accommodations and food.
  8. Roadside assistance: Pays for reasonable and necessary roadside assistance expenses caused by the disablement of your insured vehicle. Amount of reimbursement will be found on your declaration page, normally $100.
  9. Car rental and Reimbursement: Expense incurred by you for the rental fee of a substitute automobile from a car rental agency or garage or expenses incurred by you for taxicabs. Again, the amount of reimbursement will be printed on the declaration page.
  10. Fire and theft only: Coverage available normally for vehicle in storage. Pays for any direct and accidental loss of, or damage to, your insured vehicle and its equipment caused by fire, lightning, or windstorm, smoke, or smudge due to a sudden, unusual, and faulty operation of any heating equipment serving the premises in which the vehicle is located. Also, the stranding, sinking, burning, collision or derailment of any conveyance in or upon which the vehicle is being transported or theft.
  11. Collision and rollover:Pays for direct and accidental loss to your insured vehicle and its equipment when it is hit by or its another vehicle or object, or rolls over.
  12. Comprehensive: Pays for any direct and accidental loss of, or damage to, your insured vehicle and its equipment not covered by collision. Covers perils like, falling objects, damage from missiles, collision with animals, theft, accidental glass breakage, etc. (Acknowledgement to Farm Bureau Mutual Insurance Company of Idaho for assistance in defining coverages listed above.)

These are the majority of choices you have to pick from in determining how you will customize your insurance policy. Several coverages are required by state law, i.e. bodily injury, property damage, and sometimes uninsured and underinsured motorist. These have minimum limits which you cannot go below in customizing coverage. Most states have as a minimum for bodily injury of $25,000, property damage of $15,000, and uninsured motorist of $25,000. In addition, lienholders will require coverages of comprehensive and collision in order to protect their financial interest in vehicle they have loaned money against. 

As a point of interest, if you purchase comprehensive and collision and then decide to drop it, the lienholder has the right to procure coverage to protect their interest and charge it to you. When they do, in the event of a loss, the lienholder is reimbursed but you have no coverage for your financial interest.

All these options are available in a no-fault state with the exception that bodily injury limits are replaced with personal injury protection at dollar amounts you get to choose. 

In summary, as you review coverages available and begin to customize your policy so you are only paying for coverages you want or need, it won’t take you long to see that the bulk of premiums are in the liability, comprehensive, and collision coverages. Due to the minimal amount of premium some of these other coverages generate, many choose to pay for them so they don’t end up with just cheap insurance with gaps in coverage– but with quality insurance giving them inexpensive peace of mind when they need the policy the most.

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