You rely on your car insurance to give you peace of mind knowing that your vehicle, income, and assets are protected against unexpected accidents and other covered events. You know there are many types of coverage to choose from, as well as limits and deductibles, but how do you know if your policy is a good fit for your needs? How much car insurance do you really need?
Here at Integrity Insurance Agency, we know the answers to those questions are different for everyone depending on an assortment of individual factors. However, one thing is true for all drivers: Having the right coverage and limits is essential for protecting your financial future. In this article, we will explore the various types of car insurance available and reasons you need adequate coverage.
Physical Damage Coverage for Your Car
A car accident could inflict serious damage on your vehicle. In 2013, the average cost to repair a vehicle damaged in a collision was approximately $3,200. Of course, accidents are not the only way your vehicle could become damaged. Theft, vandalism, and weather-related damages are just a few examples of vehicle-related losses. How much would it cost you to repair your personal vehicle? Could you afford to completely replace your car if it is damaged beyond repair?
Fortunately, insurance for physical damages to your personal vehicle is available in the form of two types of coverage – collision and comprehensive. Together, these two types of coverage form a powerhouse of protection against damages to your car. The first – collision – takes care of damages caused by collisions, whether they involve multiple vehicles or only your car. The other – comprehensive – covers damages from incidents other than collisions, such as fire, theft, and hail damage.
Collision and comprehensive insurance can save you thousands of dollars on the cost of repairs and far more if your vehicle is declared a total loss. In that scenario, your insurance company would reimburse you for your loss based on the actual cash value of your car; although an exception may apply to antique or collector’s vehicles, which are often insured based on an agreed value.
Should Your Vehicle be Covered?
There are no laws requiring you to have insurance that protects your vehicle against physical damages, but that does not mean you should forego this important protection. Not only could it save you thousands of dollars if you need to file a claim, but it can also protect the investment you have made in your vehicle. Furthermore, some lenders require collision and comprehensive coverage to protect their financial interest in a car. If you financed or leased your vehicle, you may need coverage for your vehicle to satisfy the terms of your agreement.
Though you do not have to select coverage amounts or limits for your collision and comprehensive insurance, you will have to select a deductible. This is the cash amount you will pay toward the cost of any physical damages claims in the future. Depending on your insurer, you may be able to select a deductible of as little as $100 or as much as $1,000. While paying less for a smaller deductible may seem ideal after an accident, choosing a higher deductible may translate to lower insurance premiums. Talk to one of our team members for help choosing a deductible that is right for you.
Coverage for Property Damage Liability
Your car might not be the only one damaged in an accident. If you damage another vehicle, you could be responsible for thousands of dollars in repairs. If you total the vehicle, it could cost you much more. But what if you cause even more extensive damage than that? What if you hit a brand new Leuxs, or run into someone’s home? The damages could quickly go from thousands to tens of thousand, and perhaps even more.
Here in Kansas, drivers are responsible for damages they cause to other people’s property. State law requires that you carry a minimum amount of coverage, but it may not be enough to cover your total liability. Ultimately, you could get stuck with a bill for any damages that exceed the limits on your property damage liability coverage.
For example, imagine a driver that damages a storefront, causing $80,000 in damages. The business owner’s insurance pays for the initial damages but then pursues the driver for compensation. The driver only has $50,000 in coverage (more than the minimum required by law) and is forced to pay an additional $30,000 out of pocket by dipping into savings and making payments from future income.
Here at Integrity Insurance Agency, we recommend that drivers get a professional liability risk evaluation from a trusted independent agent in our office.
Compensation for Harm You Cause Others
Collisions send millions of people to hospital emergency rooms every year, and hundreds of thousands of them must remain hospitalized for treatment and recovery. Usually, the at-fault driver is responsible for paying for compensatory damages to the victim, and in some cases punitive damages, too. If you are at-fault for an accident that causes injuries to one or more victims, your bodily injury liability insurance will help cover the costs.
At Integrity Insurance Agency, we emphasize the importance of having the right limits for your bodily injury liability coverage. Kansas requires all drivers to carry a minimum amount of coverage, but it may not be enough to cover a major claim. Injury-related lawsuits can include compensation for medical bills, rehabilitative care, lost wages, emotional distress, and more. Whether you are partially or at-fault for an accident, you are responsible for paying the damages – even if they exceed the limits of your car insurance policy. Without the right coverage, your income and assets could be at risk.
Split Limits vs. Combined Single Limit (CSL)
Bodily injury liability limits are available as a combined single limit (CSL) or a split limit. A combined single limit does not cap the amount of coverage available per person – only per accident. A 300 CSL, for example, pays up to $300,000 in total bodily injury damages per accident, which may be allocated to victims in any amount. A split limit defines the per-accident coverage, as well as the maximum coverage per individual. A 250/500 split, for example, pays up to $250,000 per injured person and up to $500,000 for all injured parties combined per accident.
Money to Protect You and Your Passengers against Uninsured or Underinsured Drivers
When the injured party is you, your priority is making sure you get all of the medical care you need. Here in Kansas, drivers purchase Personal Injury Protection (PIP) to provide primary coverage for injuries regardless of who is at-fault for an accident. PIP can cover your medical expenses, as well as disability payments for lost wages. You also have the right to pursue an at-fault driver for compensation for your injuries. If an uninsured motorist hits you, however, your uninsured motorist coverage (UI) can provide coverage to you and your passengers instead. Likewise, underinsured motorist coverage (UIM) helps fill in the gaps left by an at-fault driver’ inadequate coverage.
Money to Help with the Little Things
Small expenses can add up quickly after a car accident. You might have to pay for towing and perhaps even a rental car while your vehicle is repaired. Instead of paying hundreds of dollars out of pocket, consider adding coverage for the ‘little’ things to your policy instead.
Beyond Car Insurance
Aside from high-limit liability insurance and the right types of coverage on your car insurance policy, you might also consider purchasing an umbrella policy to supplement your coverage. Umbrella insurance is secondary liability protection that pays for damages that exceed the limits on your primary coverage. If you are responsible for a $1 million judgment but only have $250,000 for individual liability, an umbrella policy can cover the remaining $750,000 with room to spare. Most umbrella policies are very affordable and provide extended liability coverage of $1 million or more.