Car Insurance and Auto Accidents: Are You Covered?

Insurance companies offer a variety of auto insurance packages, all providing varying levels of coverage. Most states require motorists have some minimal amount of insurance. Keep in mind, however, that purchasing just the minimum may be risky as minimal coverage may not be adequate in the event of a serious bodily injury accident. 

 Liability Insurance
Liability insurance is required by law in almost all states. It will pay for the property damage and personal injury expenses of others when you are at fault for an accident, up to the limits specified in your own particular policy. This coverage includes your legal bills. The bodily injury portion of the coverage includes medical expenses and lost wages. The property damage portion covers repair or replacement of items damaged as a result of the accident, your car not included (see Collision, below). The vast majority of states require motorists have at least liability insurance, and most require a minimum amount. 

Collision Insurance
Regardless of fault, collision insurance will cover damage to your vehicle, subject to any deductible. Period. Your insurance company will either pay for repairs or “total” your car (declare your car a total loss). (Alternatively, you can file a claim with the other person’s insurance company for the car’s repair and sidestep the deductible on your own policy.) If the insurance company totals your car, you will most likely get the actual cash value for the car, as opposed to the replacement cost. The replacement cost is the cost of replacing or repairing your vehicle with materials that are of similar type and quality without deducting for depreciation. Depreciation is the decrease in value of your vehicle due to age or wear and tear. Actual cash value is usually figured as the replacement cost minus the depreciation. Collision coverage can be expensive. You can consider increasing your deductible to lower your premium.

Comprehensive Insurance
Comprehensive covers damage that occurs as a result of circumstances other than vehicle accidents. Comprehensive will cover loss due to theft, fire, vandalism, and natural disasters. There is usually a deductible and the insurance company will not likely pay more than the Kelley Blue Book value if your car is wrecked. Of course, if you have a beater for a car and the comprehensive coverage costs more than what the car is actually worth, then don’t even bother buying it. 

Medical, PIP and No-Fault
Medical payments coverage pays for your medical expenses and those of your passenger in the event of an accident, regardless of who was at fault. This coverage applies when you are driving your vehicle or someone else’s vehicle with their permission. You and your family members are covered if you are injured as pedestrians. Be aware that some insurance policies obligate you to repay any benefits received later from the other driver or car owner. Do you need medical payments coverage when you are also covered by your health plan? Click here for an article on that subject. Personal injury protection (PIP) and No-Fault coverages are typically expanded forms of medical payment protection. Some states require these, in others it is optional. Some features include coverage for lost wages and child care.

Uninsured/Underinsured Coverage
Uninsured/Underinsured coverage pays for your injuries and possibly property damage when you are involved in an accident with someone who is at fault and has no liability insurance, or just has the bare bones limits of liability insurance. Some states require motorists to have this coverage.

Supplemental Insurance
These are essentially add-ons to your basic insurance policy. You can add on coverage for rentals, repairs or towing which could save you money in the long run.

Do I need insurance for my business?

Whether you need insurance depends on your business activities and the amount of liability exposure that you have from the activity. In addition, insurance may be required for employees (such as worker's compensation insurance, state disability insurance, or unemployment insurance).

Some common forms of business insurance include:

(1) commercial multi-peril policies (covering a variety of exposures)

(2) liability insurance covering premises, activities, and products

(3) business interruption insurance

(4) surety and performance bonds

(5) employee fidelity bonds

(6) malpractice and errors and omissions coverage

In deciding whether to purchase insurance, an analysis of your risk exposure should be performed. If you are unable to determine your risk of loss from engaging in business, contact a commercial lines insurance broker.