What is Auto Insurance?
Auto Insurance discussed in detail by the Alternative Insurance Agency Inc.
So, let’s talk about auto insurance. Most auto insurance policies are for six months to a year. Thus, it is a contract between the policyholder and the insurance company. This type of insurance provides the policyholder (i.e. the vehicle owner and/or driver in some cases) with coverage to insure property, liability, and of course medical as well. Therefore, the policyholder agrees to pay the premium and the insurance company agrees to pay losses as defined in the policy.
So hopefully, you are still reading this to learn about auto insurance not just to stay a law-abiding citizen in your state. In Florida, typically a police officer or state trooper will ask for your driver’s license, vehicle registration and proof of insurance. Furthermore, it is required in most states to have valid and up to date insurance to legally drive on the road.
Now, let’s take a moment to untangle the interesting and yet confusing world of auto insurance coverage. Hopefully, this blog article clearly explains and defines the most common types of auto insurance.
Did you know that auto insurance provides property, liability, and medical coverage?
Yes, certainly does.
- Property coverage in auto insurance pays for:
- damage to the vehicle
- theft of the vehicle
- Liability coverage pays for:
- the policyholder’s legal responsibility to others for bodily injury
- the policyholder’s legal responsibility to cover the costs of property damage
- Medical coverage pays for:
- the cost of treating injuries
- the cost of rehabilitation
- the cost of lost wages due to an auto accident
- the cost of funeral expenses
What is Auto Insurance? A blog article by Alternative Insurance Agency Inc. in Deltona Florida
Let us look at this in a different way now.
- Liability coverage simply can help protect you if you cause damage to someone or something (big or small) belonging to someone. Furthermore, liability coverage can help cover another person’s medical bills and/or the potential costs to repair their vehicle as well as property damaged from the accident.
- Collision coverage will help cover your vehicle. Let’s just say you accidentally hit another car, person or non-moving object (such as a mailbox.) Then, the collision coverage helps cover costs to repair your vehicle regardless of fault. Unfortunately, collision does not cover the damages of hitting an animal accidently. Also, it does not cover if your vehicle breaks down based on age, wear-n-tear, or lack of use making it untrustworthy to drive.
- Comprehensive coverage is really important to have in your auto policy. Why? Because it protects your vehicle from things other than liability and collision. Comprehensive auto insurance coverage will cover things like theft, vandalism, fire, severe weather, or accidently hitting an animal in the road. Did you know, that comprehensive coverage is typically sold alongside collision coverage.
So talk to one of our agents at Alternative Insurance Agency today. Call 386-575-2300 now.
In most states, there are legal minimums to how much liability coverage you must have. So therefore, it is a good idea to carry more than what is required. Why? More coverage will decrease your chance of high out-of-pocket costs later. Accidents can become very costly quickly especially when someone is the hospital for a lengthy amount of time.
Also, in most states, drivers are required to have auto liability insurance before they can legally drive a vehicle. Again, your liability insurance pays the other driver’s medical, car repair and other costs when the policyholder is at fault in an auto accident. It is important to note that all states in our country have laws that set the minimum amounts of insurance or other financial security drivers have to pay for the harm caused by their negligence behind the wheel if an accident occurs.
What is Auto Insurance? A blog article by Alternative Insurance Agency Inc. in Deltona Florida
A standard auto insurance policy is comprised of six different kinds of coverage, each of which is priced separately based our the driver wants and needs.
This is a liability coverage which applies to injuries that the policyholder and family members listed on the policy cause to someone else. These individuals are also covered when driving other peoples’ vehicles with the permission. When an auto accident happens that is serious in its nature. The driver of the vehicle at that time may be sued for a large amount of money. Therefore, we at Alternative Insurance Agency recommend you strongly recommend that drivers we are insuring should opt to buy more than the state-required minimum to protect personal assets such as homes and savings.
Medical Payments or Personal Injury Protection (PIP)
This coverage in auto policy pays for the treatment of injuries to the driver and passengers of the policyholder’s vehicle. At its broadest, the personal Injury protection (PIP) can cover medical payments, lost wages, and the cost of replacing services normally performed by someone injured in an auto accident. Sadly, it may be needed to also cover funeral costs as well.
Property Damage Liability
Be aware that this coverage pays for damage policyholders (or someone driving the vehicle with their permission) may cause to someone else’s property. Generally speaking this usually, this means damage to someone else’s car, but it also includes damage to mailboxes, street signs, lamp posts, telephone poles, fences, homes, commercial buildings or other structures hit in an accident.
This auto policy coverage pays for damage to the policyholder’s vehicle be it a car, truck, or another type of vehicle resulting from a collision with another vehicle, a movable or immovable object or as a result of flipping over. Further, it also covers damage caused by potholes. Pothole damage is more common with poorly maintain roads and it is a good thing to know about when it comes to this type of coverage.
Did you know that collision coverage is generally sold with a deductible of $250 to $1,000? Yes, it is true but be aware the higher the deductible, the lower the premium. Even if policyholders are at fault for an accident, collision coverage will reimburse them for the costs of repairing the vehicle, minus the deductible. If the policyholder is not at fault, the insurance company may try to recover the amount it paid from the other driver’s insurance company. If the company is successful, policyholders will also be reimbursed for the deductible.
This coverage reimburses for any loss or losses due to theft. But it also covers for any damage caused by an act other than a collision with something else. Here is a short list to see what it does not cover:
- Another vehicle
- Hitting another object
- Falling objects
- Civil Unrest such as riots
- Hitting animals such as critters, birds or even a deer.
Please note that comprehensive auto insurance coverage is usually sold with a $100 to $300 deductible, though policyholders may opt for a higher deductible as a way of lowering their premium. Any comprehensive insurance may also reimburse the policyholder if a windshield is cracked or shattered. In the State of Florida that is the case, glass repair companies work directly with the insurance company to collect the repair cost. You as the vehicle owner will pay nothing.
Also states do not require the purchase of collision or comprehensive coverage, but auto lenders may insist borrowers carry it until a vehicle loan is paid off in full. Comprehensive auto insurance is usually chosen to cover vehicles that are in good condition. Be aware some insurers may not provide cover if a vehicle contains rust damage. Thankfully Alternative Insurance Agency deals with numerous insurers and we will work hard to find the best possible for your needs.
Uninsured and Underinsured Motorist Coverage
One of the most disappointing things that can happen while driving is getting into auto accident with an uninsured motorist. It is also common to have an auto accident with an underinsured driver too. That’s why having this type of insurance coverage is so important. It will reimburse the policyholder, a member of the family, or even a designated driver if one of them is hit by an uninsured driver, or worse yet a hit-and-run driver. Underinsured motorist coverage comes into play when an at-fault driver has insufficient insurance to pay for the other driver’s total loss. This coverage will also protect a policyholder who is hit while a pedestrian.
The auto insurance industry has its own language.
Here is an explanation of a few terms and phrases extensively used by auto insurance agents, so you always know what’s going on.
- Premium: The ‘annual’ charge for insurance cover.
- Claim: The process of reporting an incident to your insurance company to cover the potential costs to your vehicle or another person’s property.
- Excess: This is the amount of money you pay towards a claim.
- No Claim Bonus: This is sometimes a pre-determined amount of a discount you earn annually if you do not have an at-fault accident.
- Not At-Fault: When another driver hits you. If you can identify the driver who caused the damage you will not be charged an excess or lose your no-claim bonus.
- Write-off: Your vehicle is declared a total write-off when it is so badly damaged that it would not be either safe or economical to repair. A great example would be the total repair costs are $14000 for the vehicle but the current resale value of the vehicle was appraised to be worth $6900.
- Market Value: Where the insurer determines how much the car is worth in the market, usually using an industry guide. This guide, along with a number of other factors, determines the premium. The condition of your vehicle is also taken into account.
- Agreed Value: Where the insurer and the owner agree on the value of the vehicle at the time of taking out the policy. Any vehicle once driven off an auto dealership’s lot isn’t considered ‘new’ in the auto industry. Thus, since the vehicle isn’t new, this may be based on one of the industry guides. This figure, along with a number of other factors, determines the premium.
If reading any of this concerned you and you want to schedule an appointment with us… Feel free to 386-575-2300. Or just stop by:
Alternative Insurance Agency Inc.
1235 Providence Blvd. Suite. N Deltona, Florida 32725