Did you hear about Tiger Woods car accident?
Driving down a notoriously windy road, Tiger Woods’ SUV veered off course. After crossing a median, and 2 road lanes, the SUV hit a curb, tree, and eventually landed on its side in a brush pile. Arriving at the hospital, Woods had to undergo emergency surgery, and doctors nearly had to amputate his leg.
Car accidents can happen at any time and to anyone. To help you prepare for the worst, weโve created this car insurance 101 guide. In this article, weโll explain everything you need to know to protect yourself and your loved ones on the road.
Why insure your vehicle? Read on to find out!
Commercial vs. Personal Car Insurance
Letโs start by looking at whether you need a personal or commercial auto policy. And if you’re not sure, why not text insurance rates and get more info.
Thereโs a ton of small businesses in the United States, accounting for almost 50% of the workforce. If youโre a small business owner, you may need a commercial policy for your vehicle.
For instance, if you transport products or clients in your car, you probably need a commercial policy.
Commercial policies also help when you use your vehicle to perform a service, such as a house cleaning or lawn care. Do you have employees who drive your vehicle, or is the vehicle owned by your company? If yes, youโll need commercial coverage.
Always Tell The Truth
While commercial policies typically have higher insurance costs than personal ones, having the wrong coverage will wind up costing you more. If youโre dishonest with insurance providers about what you use your vehicle for, youโll wind up causing a ton of problems for yourself. If youโre caught lying all of your coverages could become null and void.
In other words, youโll have to cover all of the expenses from the crash out of pocket.
To avoid problems, always be honest about what you use your vehicle for when youโre securing a new policy. If you’re not sure whether or not your need commercial coverages, ask.
When Should You Update Your Policy?
As your life changes, your auto policy needs to be updated to reflect those life changes. Hereโs a shortlist of instances that should prompt a policy review:
- You get married or divorced
- Kid gets a driverโs license
- Adult licensed driver moves into the home
- You get a new car
- You move
- You switch jobs
- Purpose of vehicle changes
You should also review your auto policy coverages before each renewal.
When youโre reviewing your policy, get price quotes for increasing your coverages. You can also explore add-on coverages that you donโt currently carry, such as gap coverage or new car insurance.
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What To Look for in an Insurance Company
On your journey to find the best affordable car insurance, it helps if you know what to look for in an insurance company. For starters, the best insurance companies will be on board with the latest digital trends. For instance, you should be able to access your policy on a website and app.
Itโs also a good sign when insurance companies have active social media accounts. Having a good online presence shows you that the company cares about communicating with customers.
Next, look for a company that offers discount opportunities. Finally, when youโre calling to get a quote, the insurance agent youโre speaking to needs to be licensed.
Take advantage of talking to a licensed agent by asking all of your insurance-related questions. If at any time the insurance agent seems impatient, or unhappy to answer your questions, take your business elsewhere! Insurance is tricky to understand and well-versed agents understand that youโre going to have a lot of questions.
Cost Affecting Factors
Thereโs a variety of things that influence the cost of your auto insurance policy. While some cost factors under your control, like choosing coverage limits, others arenโt. For instance, your age, career, and homeownership status all play a role in your monthly rates. The state you live in also plays a role in premium prices.
Insurance companies take into account things like crime rates and the likelihood of natural disasters. Thatโs why hurricane-prone Florida has some of the highest coverage rates for car insurance. In Florida, itโs normal to pay over $2,500 for coverages, and thatโs not even for a full year!
How to get auto insurance Discounts
Good news! You can seek out vehicle insurance discounts if you know where to look. Hereโs a shortlist of discount opportunities you should explore:
- College degree
- Homeowner
- Safe driver
- Policy bundling
- Belonging to specific organizations
- Taking a defensive driving course
- Low mileage
- Recreation only
If youโre only going to be driving your car now and then, you may qualify for a discount. For example, perhaps since the pandemic struck, now youโre working from home.
Since youโre not using the vehicle to commute to work every day the likelihood of you getting in a crash goes down. Since insurance companies are all about risk calculation, driving your car less is looked upon favorably. As a result, you may qualify for a break on your monthly rates.
How To Insure Your Car With the Right Coverage
Next, in car insurance 101 weโre going to review all of the different coverages your policy can have. Hereโs a shortlist of all the different car insurance coverages:
- Bodily Injury
- Property Damage
- Uninsured Motorist
- Underinsured Motorist
- Medical Payments
- Personal Injury Protection
- Roadside Services
- Rental Reimbursement
- Comprehensive
- Collision
Keep in mind that thereโs no 1 size fits all when it comes to choosing coverages. Instead, you should carefully select the coverages, and coverage limits you need based on your life situation.
Liability Coverages
Bodily injury and property damage are 2 types of liability coverages. If youโre found at fault, or liable, for an accident, bodily injury and property damage will help cover the other driverโs expenses. For instance, the bodily injury will cover things like doctor visits, and other medical-related expenses.
When youโre getting quotes for bodily injury coverages, youโll have to pick the limits you want. On the low end, you can get bodily injury coverage for $25,000/$50,000, however, we suggest increasing your limits.
The first number ($25,000) refers to how much each person in the other car can claim. Whereas $50,000 is the maximum amount your insurance provider will pay out for any 1 accident. If there are 3 or more people hurt during the crash, your policy might not be able to cover all of their medical expenses.
As a result, you could wind up dealing with a personal injury lawsuit from an injured party. To prevent being underinsured, we suggest having bodily injury limits of at least $100,000/$300,000. Next, property damage will help pay for any damage you cause to the other vehicle. Again, having a higher coverage limit is wiser than going for the lowest coverage possible.
Uninsured and Underinsured Motorist
What happens if someone hurts you and they don’t have car insurance? Letโs say for instance someone without any insurance hits your car, causing you to break your leg.
If that individual doesnโt have insurance, youโll be on the hook to cover your medical expenses. That is if you donโt carry uninsured or underinsured motorist coverage, also known as UM coverages. UM, coverages come into play whenever the at-fault driver causes you injuries but doesnโt have the policy to cover your medical expenses.
You might think, โCanโt I just sue the driver that hit me?โ. However, itโs not that simple. If the at-fault driver doesnโt have any assets, thereโs no point in suing them. Another thing to consider is that personal injury lawsuits take time.
While youโre waiting for a settlement payout, youโll be responsible for covering all of your medical bills. Instead of putting yourself in a bad position, always carry UM coverages with high limits.
Stack Coverages
If you have more than one vehicle, even if itโs a motorcycle, consider stacking your UM coverages. Stacking your UM coverages is more expensive, however, it means you can make money from each carโs UM coverage if needed. Letโs say for instance you have $100,000/$300,000 in UM coverages for 2 cars.
The $100,000 is the maximum you or any passenger can claim during an accident. The $300,000 refers to the total the insurance company will payout. However, if you stack your 2 carโs UM coverage the amounts will double. Now youโll have $200,000 per injured person and $600,000 per accident.
Medical Payments and Personal Injury Protection
Both medical payments and personal injury protection will help cover your medical expenses. In some states personal injury protection, or PIP, is mandatory. Itโs common to see PIP limits of $10,000/$20,000, and medical payments ranging from $500 to $2,000 or more. You can use PIP coverages to help pay for lost income from being hurt, physical therapy, and other injury-related expenses.
Rental Reimbursement and Roadside Coverages
Donโt miss out on rental reimbursement coverages when you’re starting an auto policy. If your vehicleโs made undrivable, even if itโs your fault, youโll have a rental car fully paid for.
We suggest opting for rental reimbursement coverages that last at least 1 month. Next, roadside service is a cheap coverage that can make a world of difference. Tows, lockouts, and running out of gas are all things roadside services can help remedy.
Comprehensive and Collision Coverages
Next, letโs look at the coverages that will help protect your vehicle. Comprehensive coverage helps pay for damages to your car for things that donโt involve a car crash. For instance, hail, fire, vandalism, and theft, all fall under comprehensive coverages.
Next, collision coverage helps in the event you collide with another vehicle or object. For example, if you back up into a pole, youโd file a claim under your collision coverage.
Both comprehensive and collision coverages are optional unless youโre financing a vehicle. Typically if youโre financing a vehicle you have to carry both car coverages to secure your loan.
How Do Deductibles Work?
When you get comprehensive and collision coverages, youโll have to pick deductibles. The deductible is the amount youโll have to pay before the insurance company helps out. If you set your deductible to zero dollars you wonโt have to pay anything to use your comprehensive or collision coverages.
However, a zero-dollar deductible is likely to raise your policy premium by quite a bit. Instead, we suggest choosing a deductible amount you could easily pay if the worst occurs. For example, $500 seems to be a deductible amount that a lot of drivers feel comfortable with.
Do you have an older vehicle thatโs not worth very much? If yes, you might not need to carry coverage for the car itself. For instance, letโs say your cars worth less than $2,000. Youโd be better off saving money each month rather than paying to cover the car.
Otherwise, you could wind up paying for coverage that will only pay out a few hundred dollars. Remember, youโll still have to pay a deductible as well, which could cancel out the coverage altogether.
Comprehensive Coverages and Windshields
Certain states will replace your windshield with out a deductible with comprehensive coverage. In this scenario, set your comprehensive deductible as high as possible to keep your monthly payments low. Then if a rock hits your windshield and cracks it, you can replace it for free!
Mastering Car Insurance 101
Congratulations! Youโve successfully finished reading car insurance 101. We hope that this article was able to break down some complex auto insurance concepts into more digestible information. Now, the next step is to have an insurance agent review your current coverages.
Be sure to ask for any discount opportunities available that you might qualify for. Lastly, find out how much your premium would go up if your increase the policy’s coverage limits. If the worst happens and youโre in a car accident, youโll be so glad you have enough coverage! For more tips like these, read another article.
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