Auto Coverage Questions and Answers

Knowing what auto coverages you have and being properly insured can give you peace of mind and help avoid any misunderstanding in the event of an accident. A mistake many people make is being under insured when it comes to auto coverages. In an effort to keep the premiums lower, the policyholder may opt for high deductibles and low liability limits.

Who are the insured

The Personal Auto policy uses the words "you" and "yours" to refer to the named insured and his or her spouse. The spouse must reside in the same household as the insured. In the event of separation, the spouse is still an insured for the lesser of, ninety days, the effective date of the new policy listing the spouse as a named insured or the end of the policy period.

A family member is any person related to the named insured who is a resident of the insured's household.

Property damage means physical injury to, destruction of or loss of use of tangible property.

• The named insured's covered auto includes:
• Any vehicle listed in the Declaration, including private passenger autos, which are four-wheel motor vehicles and pickup trucks and vans that are under a certain weight limit and are not used for business purposes.
• Any private passenger auto, pickup or van the named insured acquires during the policy period
• Any trailer owned by the named insured. This includes farm wagons or implements while towed by a vehicle listed in the Declaration.
• Any auto or trailer not owned by the named insured that is being used as a temporary substitute for a vehicle shown in the Declaration that is out of use because of breakdown, repair, servicing, loss, or destruction

For Liability, Medical Payments And Uninsured Motorists Coverage

If the newly acquired auto replaces one listed in the Declaration, the new auto automatically has the broadest coverage provided for any vehicle already listed in the Declaration. If the new auto does not replace one that is already insured, coverage must be requested within 14 days after acquiring the auto

For Physical Damage Coverage

For Physical Damage coverage, it doesn't matter if the new auto is a replacement or additional auto. If the insured already has at least one vehicle insured for Physical Damage coverage under the policy, coverage begins on the date the auto is acquired as long as the insured requests coverage within 14 days after acquiring the auto. The new auto will then have the broadest coverage provided for any vehicle already listed in the Declaration. If the insured does not have Physical Damage on an auto, coverage must be requested within 4 days after acquiring the auto. If a loss occurs in the time before the insured requests coverage, a $500 deductible applies.

Liability Coverage

Most states now require the policyholder to have a minimum of 25/50/25 liability limits. Although, there may still be states that offer 10/20/10 limits. The most important part of a persons auto coverages is the liability limits. Many people are only concerned with their comprehensive or collision deductibles.

In the event of an at fault accident, the  policyholder is most affected by their limits of liability. Understanding how your auto coverages work and the amounts paid by the insurance company can reduce the risk of you, the policyholder being responsible for damages over the coverage amounts.

Example...for illustration purposes, lets say, your auto policy will pay up to ten thousand dollars in property damages you concur, should you be at fault in an accident. Take for instance that you or a member of your household was involved in an accident, with a fifty thousand dollar SUV, in which you were at fault. The estimate to repair the other parties vehicle comes to thirty thousand dollars. No problem, I've got insurance! Well yes and no, your policy limits will pay up to ten thousand dollars. Guess who's responsible for the other twenty thousand dollars. That's right...You Are.

How much liability should I carry on my autos?

A general rule of thumb is that you can't carry enough liability insurance. Actually, the liability coverage is the most affordable part of your insurance policy. Most all states require a minimum of 25/50/25 coverages for liability.

What do these coverage amounts mean?

The first set of numbers 25/50 refer to bodily injury. Meaning that the insurance company will pay up to 25 thousand dollars per person involved in any one accident, up to a total of 50 thousand dollars for any one accident.

Note: If you are involved in a serious accident in which you are at fault, these coverage amounts may prove to be inadequate. Especially, if there are three or more passengers in the car.

The last number in 25/50/25 refers to property damage. This is the damage you do to the property of the person involved in which you are at fault. Your insurance company will pay no more than twenty-five thousand dollars for any one accident.

Note: If the damage exceeds the amount of your property damage coverage, you the insured are responsible for the difference.

Comprehensive and Collision

The comprehensive coverage applies to anything other than an accident. For instance, windshield cracks or breakage, contact with an animal, a limb that may fall on your auto, an object that falls from a vehicle.

Comprehensive Deductibles

Deductibles range from fifty to five hundred dollars. The deductible is the part the policyholder is responsible for. The lesser the deductible the higher the insurance rates.

Collision Deductibles

The same applies here. If you are found at fault, you the policyholder are responsible for the deductible amount. Damages are paid minus the deductible. The cost factor remains the same as the comprehensive deductible. The lesser the deductible the higher the insurance rates.

Note: Most body shops will cover a portion of your deductible, in the event of windshield breakage or body damage.

How can I save money on my auto insurance?

• You may consider raising your deductibles.  If your car is financed, check with your lender to see what are the maximum amounts allowed.
• If you are a homeowner, you will get a home/car discount if you carry your homeowner and auto insurance with the same company.
• Many insurance companies offer their best rates if you EFT...bank draft your payments.

How can I keep the cost down for youthful drivers?

Most insurance companies now days do what is called, driver averaging. This means regardless as to which car the youthful driver drives, the company bases their rates on the youthful driver driving all cars in the household.

How can I lower my insurance cost?

Since insurance companies require you to list all drivers that live in the household, you can do one of a few things.

1. Ask your agent to write a new auto policy on the youthful driver. Insure the vehicle your child drives. The child will have to be excluded from your policy. This means that they will not be insured if they drive mom or dads car. I know...little Johnny may not like this but, he's not having to pay the premiums.
2. Some insurance companies have for lack of better words a company within their company, where they can assign certain cars to certain drivers, regardless of which car any particular driver drives. Although this is becoming less and less available. Check with your agent on availability.
3. Youthful drivers don't see a discount on car insurance until they are either married or reach the age of twenty-five. You may want to consider, excluding the youthful driver from the vehicles that carry full coverage and insuring them on an auto that requires liability only.