Types of Auto Insurance Coverage
According to the National Association of Insurance Commissioners, the average cost of auto insurance in the United States for 2011 was $797. Competition in the market means auto insurance costs have actually fallen in the last 10 years. For example, the average cost in 2004 was $843.
In most states, auto insurance is a legal requirement, but motorists are often confused by the wide range of choices. Keep reading to discover simplified explanations of what you can expect to be offered.
Almost every state requires you to have a minimum amount of liability insurance. In Arizona, for example, the minimum limits are:
- Property damage of $10,000 per accident.
- Bodily injury coverage of $30,000 per accident and $15,000 per person.
Liability insurance covers you for the cost of repairing property damaged in the crash and medical bills of others injured in an accident. It is a good idea to have more insurance than the bare minimum if you can afford it, because it gives you extra protection in the event you are deemed to be at fault for an accident.
In such an instance, you would be responsible for claims exceeding the upper limit of your coverage. In the worst-case scenario, you could end up being forced to pay thousands of dollars out of your own pocket.
In the United States, more than 37,000 people are killed in road accidents each year, and 2.35 million are injured or disabled. With so many cars on the road, it makes sense to purchase collision insurance, as it pays for repairs to your vehicle if it is damaged in an accident. It also pays for the cost of a replacement if your vehicle is destroyed in an accident.
The value of your vehicle should be a determining factor when it comes to considering collision insurance. If you have an expensive vehicle, collision insurance is a must because the costs of repair can be enormous.
As collision and liability insurance deal exclusively with damage caused to your vehicle in a road accident, you may decide that comprehensive insurance is an important purchase. It protects you in the event your vehicle is damaged by inclement weather, animals, or is stolen.
If you hit a deer on the road, for example, and only have liability and collision insurance, your insurer will not pay for the damages. Add in a comprehensive policy and you are covered for almost every eventuality. It is most commonly purchased by motorists with new vehicles.
Uninsured Motorist Insurance
Although auto insurance is a legal requirement in most states, not everyone obeys the law. The Insurance Information Institute estimates that 12.6 percent of motorists in the United States were not insured in 2012. Oklahoma is the state with the most uninsured motorists, at 25.9 percent, while Massachusetts has the least with 3.9 percent.
Even if a driver has liability insurance, the low minimums in place in many states mean that the expenses associated with an auto accident may not be entirely covered by a policy. Being forced to pay the bill when an accident is not your fault is a nightmare for motorists, but an uninsured motorist insurance policy protects you in this eventuality. Uninsured or underinsured drivers are still obligated to pay for the costs of an accident; the problem only arises when a motorist doesn’t have the money to pay, so you may want extra protection.
Medical/Personal Injury Protection
Although the greatest cost involved in auto accidents is often human lives, the medical bills associated with treating injuries can be astronomical. The Insurance Research Council found that the average claim for personal injuries sustained in an auto accident in 2012 was over $14,600; the average auto liability claim for property damage pales in comparison at just over $3,000.
Medical/personal injury insurance covers the medical bills for you and your passengers regardless of who is at fault for the accident. You may find this form of insurance useful to you if you don’t have a good health insurance plan, as it can potentially save you tens of thousands of dollars in medical bills.
At present, no-fault insurance is only available in about a quarter of U.S. states. It covers injuries and property damage no matter who is to blame for an accident. No-fault policies can cost a little extra, and you may decide it is cost-effective to choose another type of auto insurance. However, this protection can offer much needed peace of mind.
This is a good choice for motorists who are still paying off the cost of their vehicle. If your car is damaged beyond repair in an accident, the insurance company will not pay the purchase value of the vehicle and will instead pay what it deems it to be worth at the time of the accident. As vehicles depreciate so rapidly, it’s clear you will receive a lot less than you paid for it.
If you owe more on the car than what it is worth today, gap insurance should be a consideration. Some lenders will not allow you to drive away in the vehicle until you have gap insurance or something similar in place. Therefore, you may already have gap insurance without realizing it.
This is a certification of insurance and is proof that you meet your state’s minimum auto insurance requirements. SR-22 filings are normally taken out by motorists who have committed a serious traffic violation, such as DUI, driving without insurance, being involved in a serious auto accident, or having had their driver’s license previously revoked.
SR-22 certificates typically need to be filed every three years, and you can avoid having to file another SR-22 if you remain free of violations during that period of time. You will need to file your SR-22 directly through your auto insurance provider to ensure you are not falsifying your car insurance status.
Before you get ready to hit the road, you need auto insurance, so shop around to find the best quote today.