Auto Insurance

Auto Insurance Basics

I believe that every state in the Union requires drivers to carry automobile liability insurance. However, you only need to prove that you have it when you go for a driver’s license or car registration or if you get stopped by the police.

It is common for some people to buy a year’s auto insurance policy using monthly premiums. They get the needed proof of insurance and then stop paying the premiums.

If you are financing a car, the finance company will require you to carry auto insurance or they will supply it for you at a nice markup. It’s cheaper to get your own.

As with a homeowner’s policy you get two types of coverage: property damage – protection against theft and damage to your car. You also get liability coverage - to indemnify people or property you injure with your car.

Property damage protection is based on the value of the car and decreases as the car depreciates. Once you car is old enough, it’s not worth carrying. Self-insure against the thousand or two you might lose if the car is stolen or wrecked.

The higher deductible you choose for your collision coverage, the lower your premium will be.

Liability coverage should be carried for as long as you own the car. This protects you and your family’s assets if you cause personal injury or property damage. It also provides you with a legal defense against claims made against you.

Generally states require only $15,000/$30,000 auto liability coverage. If you injure one person you have the lower coverage: if you injure two or more in the same accident, you get the higher.

This coverage is pitifully inadequate. A jury in most states will award more than that for a broken leg. Awards can go into the millions for more serious injuries.

I would suggest that you buy a flat $100,000 auto liability coverage. Do the same with your homeowners or renters policy. Than buy a $100,000 deductible umbrella policy with $1 million or more of coverage, depending on the assets you own.

Umbrella policies are relatively inexpensive and if you buy all your coverage from one company, they’ll not only tie everything together nicely for you, but also give you a break on the premium.

An umbrella policy will also provide protection for things not covered by either auto or homeowners policies, liable or slander for example - although you have to face the large deductible.

One other coverage you need from your auto insurance policy is uninsured/under insured motorist coverage. This protects you when you are hurt or your car is damaged by someone either without their own auto insurance policy or with inadequate coverage to pay for the damages caused.

Your medical bills will be paid without the hassles of deductibles and co-pays. Your car will be fixed and you might even qualify for damages, such as permanent spinal injuries or facial deformities caused by the accident.

Don’t forget that most auto policies apply to any car you drive – even a rental - and also cover whoever drives your car, with certain limited exceptions.

Also don’t forget that you might forfeit your own coverage – not the liability part – if you are driving under the influence when the accident occurs. Read the exclusions on your policy carefully.

If there is a dispute over the terms of coverage or if the damages sought exceed the policy limits, your insurer is required to send you a “reservation of rights” letter, usually within thirty days. If you receive such a letter, the insurance company will pay a lawyer to represent your own interests.motorist Find an experienced litigation attorney. You will need your own representation if either of these events occur, The lawyers paid to defend the claim will have a built in conflict of interest.motorist

Insurance

Life Insurance

Health Insurance

Homeowners Insurance

Long Term Disability Insurance

Umbrella Insurance

Also see:

The Reservation of Rights Letter
What to do if you receive a reservation of rights letter from your insurance company.

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