Understanding Auto Insurance

Understanding your coverages and why you need them:
1. Liability Coverages - This covers losses to others for which you are deemed to be liable
  a. Bodily Injury - xxx/yyy is how this coverage is often referred to and means that you have coverage for bodily injury to others up to $X 1000's of dollars for any one person, and $Y 1000's of dollars in total for any one accident.
  b. Property Damage - this is normally the coverage to replace or repair someone else's vehicle in the event you are at fault. Less than $100,000 of coverage is probably not prudent in today's market given the cost of new cars. The good news, to increase your limits from $50,000 to $100,000 is usually less than $1.00 per month increase in your current premiums.

2. Uninsured Motorist - this protects you from loss by an uninsured or underinsured driver. This coverage is also broken down by Bodily Injury and Property Damage limits.
  a. The amount of Bodily Injury coverage will vary widely based on an individual's other available coverages and their risk tolerance.
  b. The amount of Property Damage should be greater than the highest value vehicle you own, and you should select the lowest deductible offered as again the difference in premium for lower deductibles is usually less than $.50 per month.

3. Collision - this coverage takes care of repairing your vehicle depending on the type loss and after a stated deductible has been met. In general if the car is involved with hitting something other than an animal, it would be covered under collision. (always inquiry as to the impact on premiums based on claim(s) filed under this coverage)

4. Comprehensive covers non-collision damage, after a stated deductible has been met, such as hail damage, vandalism, theft, or being struck by an object such as a rock in the windshield or falling tree limbs. (claims frequency is normally more a reason for premiums to potentially adjust for losses vs. severity of claim filed).

NOTE: in general, if a car is less than 5 years old, it may be less expensive if you change a current $500 deductible for Collision and $500 deductible for Comprehensive, to $1000 for Collision and $100 for Comprehensive.

5. Rental Car Coverage - this is often the most misunderstood and/or misinterpreted. Coverage for a rental car comes in two categories:
  a. If you rent a car, your personal auto provides the same coverage for that vehicle as it does for your own cars. If you have Collision and Comprehensive coverages, it is likely you will not need the additional coverages offered by the car rental company.
  b. The second type of coverage is an optional coverage on your policy that will provide for a daily rate that you choose when you purchase the policy (normally $20, $30, or $40) for up to 20 or 30 days depending on your company's policy provisions. This coverage kicks into effect when your vehicle is in the body shop for repairs that are covered under either your collision or comprehensive coverages.

Thanks to Milton, Georgia Allstate Agent M. Terry Mechling for this useful guide to insurance coverage