Are you in need of car insurance? Are you scared of overpaying for your plan, but worried you may not be covered in the event of an accident?
At Upgrade Insurance, we are dedicated to helping you find the best auto insurance for a decent price. Insurance prices vary a lot depending on the provider. With access to dozens of A-Rated, admitted insurance carriers, we can help you find the deal you’ve been looking for. Things like the car you drive, how safe of a driver you are, your credit score, how often you make your insurance payments can all change your rate. We ask all the difficult questions to make sure that you get all the discounts and get the best price.
To get started saving money on your auto insurance, complete our Free Quote Questionnaire or call us at 1.800.901.3090 and one of our dedicated, trustworthy, and knowledgeable agents will be there during our business hours.
Car Insurance Basics
What did you think the first time you looked at your first auto insurance package? You were probably confused about the different kinds of coverage, what the coverage amounts meant, and if it was all really necessary. We’ve all been there.
You will want to know exactly what your auto insurance plan means, what you’re paying for, and how you’re covered in the event of an accident. These Auto Insurance Basics can help to get you started.
What is Car Insurance
First things first, auto insurance is a plan that you purchase to protect you financially if you get in an automobile accident or damage is done to your vehicle. As with other types of insurance, you pay an amount of money each month called a “premium.” In exchange for your monthly premium, your insurance company pays a certain portion if you get into an accident. The amount that you must pay each month is reflective of how much your insurance agency is agreeing to pay for damages.
An auto insurance policy is usually created for a six-month time period. In some cases, you will get a year-long policy. This does not mean you are unable to change your policy until it is up. In most cases, you are free to change the policy whenever you need to.
What does Car Insurance Cover?
Each auto insurance policy will look different depending on the holder’s needs, but at the main level, auto insurance coverages can be broken down into three main categories: property, liability, and medical.
The property coverage portion of your auto insurance plan will be used to cover your own property. This is the portion that will be used if damage is done to your car or if your car is stolen.
Liability coverage is there to protect you if you are responsible for damages done to another individual or their property. If you were to rear end a car, your liability coverage would be used to make the repairs to the other party’s vehicle.
Your policy’s medical coverage will be used if someone is injured in the accident. This money can be used for everything from covering hospital bills to even paying for a funeral if necessary.
What are the Different Kinds of Coverage?
While property, liability, and medical may be the coverage categories, there are actually much more than three kinds of coverage. Your basic insurance plan will probably as you to have six different kinds of coverage:
- Bodily Injury Liability: Bodily Injury Liability refers to money that can be paid if you injure another individual in an auto accident. If you do not have enough money in this category to cover things like medical expenses, lost wages, or more, you risk being sued. It is best to ensure this amount is more than enough.
- Personal Injury Protection (PIP): PIP, or Personal Injury Protection, is what is used if you or someone in your car is injured in the accident. This area will help you cover your own medical bills or lost wages. While you do not need to worry about being sued if this isn’t high enough, keeping this amount sizeable can ensure you don’t need to pay out of your own pocket.
- Property Damage Liability: If you are the cause for an accident that damages someone else’s property, including house, car, fences, or other items, then your Property Damage Liability will cover the expenses to repair them.
- Collision: The Collision coverage can be used to make repairs to your car whether or not you are at fault for the accident. If you are not the reason behind the accident occurring, then your insurance company will work to have your damages covered by the other’s Property Damage Liability. If they are unable to do so, you can use your Collision coverage to repair your vehicle. Collision coverage can also be used if your car is damaged from potholes.
- Comprehensive: Comprehensive coverage is in place to help you pay for repairs covered by occurrences out of your control, particularly those involving weather. If your car is damaged by falling objects, hail, flood water, fire, or even a collision with a deer or other animal, your Comprehensive coverage will help to make the repair. This is also the coverage that is used if your windshield is cracked. Usually, Comprehensive coverage is not mandatory but it is a good idea to include it.
- Uninsured and Underinsured Motorist Coverage: If you get into an accident where the other individual does not have insurance or their insurance is not enough to cover your expenses, this category can help you make the repairs. This category also covers hit-and-run drivers.
Each of these categories is added to your insurance plan separately, so you can increase your coverage in one area while decreasing your coverage in the other at the same time. This allows you to create a completely customizable plan to fit your any need.
Do I Have to Have Insurance to Drive?
YES! The rules for auto insurance coverage will typically vary from state to state, so it is always a smart idea to talk with your insurance representative about the necessary components of your plan. Although every state will not have the same requirements, it is still a must to have auto insurance if you are going to be driving a car.
If you have teen drivers, you can add them to your insurance policy to be covered under the same plan.
What If I’m Leasing My Car?
Whether or not you own the vehicle does not matter when it comes to insurance. The same rules for your state will apply if you are leasing the vehicle. The individual financing your car loan or leasing the car to you may require certain levels of coverage for the vehicle, including a full amount of Comprehensive and Collision coverage. Be sure to discuss these with your loan provider before agreeing to an insurance plan.
The provider of your lease or loan may also require you to get something called “gap” insurance. Gap insurance comes into play if the damage done to the vehicle is irreparable. In this event, the insurance company would give you a check for the vehicle rather than paying for damages to be repaired.
While this may be enough money to cover the amount you still own to your leasing company, the check you will receive is for the depreciated value of the vehicle, which is probably less than the amount of money that you owe. With “gap” insurance, the difference is covered.
The way you go about getting gap insurance may depend on your situation. For most leasing companies, your gap insurance cost will be included in the monthly payment you make on the vehicle. If this is the case, you will not need to worry about getting a policy of your own. Be sure to discuss the details with your leasing company when establishing your agreement.
An auto loan may work differently. If your vehicle is totaled while you still have an auto loan, your loan provider may not have gap insurance on the deal. If that is the case, you will still be required to pay off the amount of the loan. If you purchase a gap insurance policy, you are covering your assets if the car should ever be totaled while your loan is still out.
How Does Car Insurance Work When I’m Renting a Car?
When you are renting a vehicle, you will still need to have auto insurance of some form. What you should do when renting a car will differ depending on if you have an existing policy or not.
For Auto Insurance Policy Holders
If you already own a vehicle and you’re renting a car while you’re on vacation or your vehicle is getting repaired, your auto insurance policy is most likely enough to cover the rental. Contact your insurance provider to discuss the rental and how your insurance qualifies. You may be able to change your policy before you rent the car to have adequate coverage.
You should also talk with your credit card company. Credit cards can provide some level of insurance for rental cars, but you will need to discuss the benefits with your provider.
For Individuals Without an Auto Insurance Policy
If you don’t own a car or otherwise do not have an auto insurance policy, you will be able to purchase one from the rental dealership for the time the vehicle is rented. Here is a brief overview of the various kinds of insurance you can receive from the dealership and about how much you can expect them to cost:
- Collision Damage Waiver (CDW): This insurance coverage is there to protect you if the vehicle is damaged or stolen. The cost of a Collision Damage Waiver can range between $9 and $19 a day but may be void if you are speeding or driving drunk.
- Liability Insurance: Rather than providing you with a few kinds of liability insurance as you would receive with a standard auto insurance policy, a liability insurance policy from the rental dealership can cover up to $1 million in damages. Although it may seem like a lot, it isn’t usually enough for a serious accident. This portion of the insurance policy can cost about $7 to $9 per day the car is rented.
- Personal Accident Insurance: For about $3 per day, Personal Accident Insurance can help cover medical or ambulance bills if you are in an accident with the rental car. This kind of insurance is not necessary if you these bills are covered under your health insurance.
- Personal Effects Coverage: Finally, Personal Effects Coverage can cover items that are stolen out of the rental car. While this only costs about $1.25 per day that the car is rented, stolen items are usually covered under homeowners or renters insurance. Check your policy before committing.
Rental companies will have their own policies for giving insurance. Your credit score or driving history may need to be checked before your temporary auto insurance is approved.
How is a Cancellation Different from a Non-Renewal?
While both are ends to the insurance agreement, they are called different things depending on who ends the deal. A cancellation from the insurance company will occur if you fail to uphold your end of the deal, including if you fail to pay your premium, you’ve committed fraud on your application, or your driver’s license is revoked or suspended.
On the other hand, a non-renewal means that you decided you do not want to continue on to create a new policy. Your insurance company may also have the option to not renew a policy with you. If they decide not to continue, they will need to give you a detailed explanation.