Basics of Auto Insurance
Auto insurance is something almost everyone has to buy. If you own a vehicle in the state of Missouri, you are required to purchase at least a minimum-limit liability policy. In this week’s blog, we are going to look at the basics of an auto policy. This way you will be understand what you are buying.
Personal vs Commercial
Do you need a personal or commercial policy? Most people believe that if an auto is titled in their individual name then they do not need a commercial policy. That may or may not be the case. Most personal policies do provide some coverage for business exposures, but may not provide any coverage for your business if that is the primary use of the vehicle. Also, almost all personal umbrella policies exclude auto claims arising out of business use. Make sure to fully discuss the business use of your vehicle with your agent. That way they can determine which policy will best protect you.
Personal policies will be rated based on several factors. The first rating factor will be related to the primary driver and his or her driving record. A second consideration will be the use of the auto. For example, is it used for pleasure, transportation to work or to school. Finally, the year, make and model of the car will be used if you add collision and comprehensive coverage to the policy.
Primary Coverage
Generally an auto policy can provide three primary types of coverage: liability, collision, and comprehensive coverage. Liability insurance covers costs associated with bodily injuries or property damage in accidents for which you are responsible. Each state has a minimum limit you are required to carry. However, in most cases those limits are not sufficient for many accidents. Collision insurance covers the cost of repairs or to replace a damaged or totaled auto after hitting another car, object or structure. Finally, comprehensive coverage pays for damage caused by something other than a collision. Examples would be hail, windstorm, fire, flood, theft, vandalism and animal damage.
Other Coverage
There are several other coverages that can be added to your auto policy. Some of these are:
Medical payments – This covers the costs of injuries for you and others in your vehicle after an accident, regardless of who was at fault.
Rental Reimbursement – This will pay for a rental vehicle while your auto is in the shop for repairs after an accident. This is usually subject to a per day limit and a total maximum number of days.
Towing and Roadside Assistance – This coverage provides emergency roadside assistance and towing. The towing usually has a maximum dollar limit. Anything charged above that limit will be your responsibility.
Accidental Death Benefit – More and more companies are providing this additional coverage for autos that provides a small accidental death benefit if you or your passenger is killed in an accident.
As with any insurance policy, it is important to keep coverage limits in mind when purchasing auto insurance. Insurance is only as good as the protection it affords you when you are in an accident. Lower limits may save you a few dollars a year. However, insufficient limits at the time of an accident can cause years of financial hardship for you and your loved ones. Let one of our Advisors show you how to maximize your protect will out breaking the bank. We look forward to your call.
