Car insurance is designed to protect you and everyone who shares the road from the potentially high cost of accident-related and other damages or injuries. It is a contract in which you pay a certain amount — or “premium” — to your insurance company in exchange for a set of coverages you select.
A basic car insurance policy is required for drivers in most states, although the mandatory minimum coverage and policy limits will vary. If you finance or lease your vehicle, your lender may also require specific car insurance coverages and limits.
Beyond legal requirements, carrying car insurance is a smart decision. If you cause an accident or get into one with an uninsured or underinsured driver, you may be held responsible to cover related expenses, such as car repairs, property damage, medical bills, lost wages, legal fees and more. Without the proper coverage, your financial well-being may be at risk.
Working with an insurance representative to create a car insurance policy that addresses your individual needs and budget can protect you, your loved ones and your assets in the aftermath of an accident.
It depends on your state, your insurance company and the coverage options you choose. Since bodily injury and property damage liability insurance is required in most states, at a minimum your policy should cover vehicle and property damage, injury-related expenses and legal fees for other people involved in an accident you cause, up to the state-mandated policy limits.
You and your car, however, are not automatically protected by the minimum coverage requirements. To get the most complete protection for your individual needs, discuss available coverage options with your insurance representative.
Your car insurance coverage typically applies to any driver listed on your policy, which is why it’s important to list all drivers in your household on your policy.
Your policy may offer some protection for licensed drivers not listed on your policy who you occasionally let drive your car, such as:
- Extended family (visiting grandparent(s), parent(s), aunt/uncle(s), niece/nephew(s)).
- Friends (sharing shifts on a road trip, borrowing while your own car is broken down).
- Boyfriend/girlfriend (who doesn’t live with you).
Check with your insurance representative to learn more about who needs to be included and who is covered on your policy.
It depends on your particular situation. At a minimum, drivers must carry bodily injury and property damage liability coverage at the state-mandated limits to cover vehicle and property damage, injury-related expenses and legal fees for other people involved in an accident you cause.
Policy options beyond the minimum state requirements are available, and can offer more complete protection. It is important to carefully consider your specific circumstances, including your risk tolerance and budget, then work with your insurance representative to create a policy that addresses your needs. Be sure to discuss the following popular coverage options with your agent.
Ask Your Insurance Rep About:
New Car Replacement
Towing and onsite roadside services, such as jump starts and flat tire changes
Rental car while yours is being repaired after an accident or incident
Car Rental Reimbursement
Your own medical expenses after an accident or incident
Personal Injury Protection (PIP)
Medical Payments Coverage
Uninsured/Underinsured Motorist Coverage
Accident-related expenses if the driver who caused the accident has no insurance or inadequate coverage
It depends. If you qualify, most car policies renew automatically. We will notify you about any policy or premium changes in advance.
It is important to review your coverage needs with your insurance representative on an annual basis.
Bodily injury liability insurance is the most important car coverage a driver can have. If you cause an accident, it helps cover accident-related expenses such as hospital and medical bills, lost wages, rehabilitation and legal fees if a lawsuit results.
At a minimum, you need to purchase a policy with the bodily injury liability limits required by your state. However, this state-mandated minimum may not offer adequate protection. Discuss your bodily injury liability policy limits with your insurance representative. Remember, you will be personally responsible to cover any related costs above this limit.
Property damage liability insurance generally covers damages to another person’s property — for instance, their car — when you are responsible for an accident. It can also cover some legal expenses if you are sued because of a car accident.
Some level of property damage liability coverage is required in most states. If you live in one of them, you need to purchase a policy with limits at the state-mandated minimum. But this may not offer adequate protection. Discuss your property damage liability policy limits with your insurance representative. Remember, you will be personally responsible to cover any related costs above this limit.
Collision coverage helps cover the repair or replacement of your car if it hits another car, object or overturns. While not required in most states, if you finance or lease your vehicle, your lender may require you to carry collision coverage.
Without collision coverage, you will need to pay the full cost to repair or replace your car out-of-pocket after an accident that is your fault or involves only your car. Consider your risk tolerance and financial circumstances when choosing the level of protection that’s right for you and your family — then discuss your collision coverage needs and deductible options with your insurance representative.
Medical payments coverage generally protects you, household relatives and your passengers from the potentially high cost of accident-related medical expenses. It also covers you as a pedestrian if you are hit by a vehicle.
Some states offer personal injury protection (PIP) in place of, or in addition to, medical payments coverage. Also known as “no-fault” insurance, personal injury protection often covers additional expenses related to injuries sustained in an accident, such as:
- Medical and hospital bills.
- Funeral expenses.
- Lost wages/income.
Without medical payments/PIP coverage, you will need to pay the full cost of medical and related expenses out-of-pocket after an accident that is your fault or involves only your vehicle. Consider your risk tolerance and financial circumstances when choosing the level of protection that’s right for you and your family – then discuss your medical payments/PIP coverage needs, options, deductible and policy limits with your insurance representative.
Uninsured/underinsured motorist insurance generally provides protection for bodily injury to you and your passengers when the at-fault driver has inadequate or no insurance coverage. In some states, it may be offered as a combined coverage, while in others it may be offered as two separate coverages (one for uninsured and another for underinsured motorists).
According to recent research by the Insurance Information Institute, 12.6% of drivers in the U.S. are uninsured even though it is illegal. If you are hit by one of these drivers and you do not have uninsured/underinsured motorist coverage, you may be left holding the bill for all expenses — including damage to your car and injuries sustained by you and your passengers. Consider your risk tolerance and financial circumstances when choosing the level of protection that’s right for you and your family – then discuss your uninsured/underinsured motorist coverage needs, options, deductible and policy limits with your insurance representative.
Loan/lease gap insurance can pay the difference between what your car is worth and what you still owe on it if your car is totaled.
The value of a vehicle depreciates the minute you drive it off the lot. If you are financing or leasing your vehicle and it gets totaled in an accident, you may owe more than the vehicle is worth (which is the maximum amount you can recoup from basic auto coverage).
Loan/lease gap coverage pays the difference between the actual cash value of your vehicle and the unpaid balance on your loan or lease if your vehicle is totaled due to a loss covered by your comprehensive or collision insurance. For instance, if your car is worth $10,000 at the time it gets totaled in a covered incident, but you still owe $15,000 on your loan or lease, loan/lease gap coverage could pay off the remaining $5,000 so you don't have to settle the balance out of pocket.
Loan/lease gap coverage does not cover carry-over balances, lease penalties, overdue payments or extended warranties. Also, you must be the original owner of the financed or leased vehicle, and the car must be purchased from a new car dealer — not a previous owner — to be eligible for this coverage. Please carefully review with an insurance representative all terms, conditions and exclusions of this coverage.
If you finance or lease your vehicle, your lender may require you to carry a minimum level of loan/lease gap coverage through your insurance provider or may include it in the cost of your car payment.
Discuss your loan/lease gap coverage needs, options, deductible and policy limits with your insurance representative before purchasing car insurance.
A deductible is the amount of money you must pay out of your own pocket before your car insurance kicks in. Deductibles only apply to certain coverages, such as comprehensive and collision, and typically range from $100 to $1,000.
A policy limit (or “limit of liability”) is the maximum amount your insurance company will pay for any claim covered under your policy. Policy limits are often comprised of two dollar amounts — for example, $100,000/$300,000. The first amount ($100,000) would be the per person policy limit, while the second amount ($300,000) is the total limit in case of a covered accident.
Here’s one example of how deductibles and policy limits work. Let’s say your car is damaged in an accident you caused, you have collision coverage with a $1,000 deductible. If the cost to repair your car is $500, you will pay the entire $500 since it is less than your deductible.
To keep monthly premiums low, drivers often opt for higher deductibles and lower policy limits. But if you can’t pay your deductible or accident-related expenses above and beyond your policy limits, you may find yourself in financial crisis. Choose wisely. Consider your risk tolerance and financial circumstances when deciding the level of protection that’s right for you and your family – then work with your insurance representative to create a policy that balances your individual needs with a premium, deductible and policy limit you can afford.