Car insurance helps pay to repair or replace your vehicle and to cover injuries to you and other people involved in an accident. It also covers damage to your car from theft, fire or vandalism. Read your policy carefully.
Your rate depends on your likelihood of making a claim. Insurers use a process called underwriting to evaluate this risk and set your rates. Discover more at Leading Insurance Outsourcing Company.
Liability coverage
Liability coverage is a must-have for all car insurance policies. It pays for others’ property damage and bodily injury resulting from an accident that you cause – typically up to the limits you select. It also provides for legal defense costs in case you are sued. Liability insurance may be combined with personal injury protection and uninsured/underinsured motorist coverage in a single policy, or purchased separately.
In states that use the No-Fault system, medical payments (PIP) and personal injury protection cover expenses related to an accident regardless of who is at fault. Uninsured/underinsured motorist insurance covers injuries and damages you incur when another driver has no auto insurance or insufficient coverage, as well as accidents involving hit-and-run drivers.
Comprehensive coverage repairs or replaces your vehicle after an event other than a collision, such as theft, vandalism, fire, flood, hail and animal damage. It also can pay for a rental car if your vehicle is in the shop for an extended period of time after an accident.
Collision coverage
While it doesn’t cover everyone, collision coverage typically pays for damage to your car caused by a crash with another vehicle or object. It can also pay for damage from a hit-and-run or rollover accident, and from weather like flooding, hail and lightning. You can select a collision deductible (the amount you must pay before your insurance company starts paying) and this can impact your premium. Generally, higher deductibles lead to lower premiums.
Collision coverage isn’t required by law, but many lenders require it if you lease or finance your vehicle. It might also make sense to carry it if you own an expensive vehicle or would have trouble covering repair costs out of pocket. In most states, your car is paid back based on its actual cash value after an accident, which takes depreciation into account. You may also choose to purchase a policy with replacement coverage, which will pay to replace your car with a new one of the same model if it’s considered totaled after an accident.
Comprehensive coverage
A comprehensive car insurance policy typically provides protection against damage that occurs to your vehicle outside of a collision. It also covers incidents that aren’t related to driving, like a tree falling on your parked car after a storm or your dog running into your windshield. This type of broader coverage can be valuable for drivers with expensive vehicles, those who live in an area prone to non-collision incidents or those who want to protect their car against the unexpected.
When choosing a comprehensive car insurance policy, consider the limits and deductibles that are offered. The higher the deductible you select, the lower your premium will be. You should also assess the provider’s reputation for customer service and claims handling.
Uninsured/underinsured motorist coverage
The number of uninsured drivers varies by state, but about one in eight motorists do not have car insurance. Without uninsured/underinsured motorist coverage — usually referred to as UM or UIM coverage — you might be left paying for medical bills, property damage and lost wages out of your own pocket.
Generally, UM insurance covers bodily injury suffered in an accident with an uninsured driver, including hospital bills, funeral expenses and pain and suffering. It can also pay for the cost of a rental car or other property damage. UIM coverage (also known as UMPD) fills in the gap between an at-fault driver’s liability policy limits and your own UM limit, up to the amount you choose.
New York law requires UM and UIM coverage as part of your auto insurance policy. Other states offer it as an option or require only a certain amount of bodily injury coverage. New York’s UM and UIM policies provide protection to you, your family and other passengers in your vehicle.