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Get to Know Insurance: Personal Auto Insurance

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Welcome back to Get to Know Insurance! We’ve taken some time off from this series but are ready to dive back in to start the New Year. Every year we take some time to look at what we’re doing, how we’re doing it and how we can better serve our clients and the community we call home. This year, we will continue to provide the best insurance services we possibly can to our current clients while also focusing on how we can provide value to as many people as possible through our blog posts, social media accounts and our mailing list! 

This week we are going to focus on personal auto insurance. This is something many people dread thinking about, shopping for and even paying for on a monthly basis and we completely understand. Insurance is one of the few things we pay for without the intention of using. No one wants to get into a car accident, have their vehicle broken into or have any kind of event happen that would be considered a “loss.” We try as hard as we can to provide value with the policies we sell but usually that value isn’t seen until insurance is needed.

Personal auto insurance is complicated, there are laws requiring it, state minimum limits that vary from state to state and a large number of insurance companies that are constantly advertising and trying to find new ways to convert us into customers. With so much information out there, it can be hard to make a decision, especially because that decision usually comes down to who can save us the most money. The problem we see with basing decisions solely on price is that it leads to purchasing a policy without a full understanding of what is being purchased.

So that’s what we’re going do try to do right now, explain personal auto insurance in a way that makes it a little easier to understand what you’re buying so you can be a more informed buyer the next time you’re shopping for insurance. One thing we believe 100% is that price isn’t everything, if we can provide value at a low price, awesome, but we always prefer to provide value over the lowest price.

In Idaho, car insurance is made up of Liability coverage, Uninsured and Underinsured motorists coverage, Medical payments as well as Comprehensive and Collision coverage. There are also numerous add ons that can be attached to your policy, like vanishing deductibles, roadside assistance and others but for now we’ll focus on the basics.

Liability coverage can be explained very simply; it is coverage provided if you’re liable for the damages. What this means is that if you cause an accident, for whatever reason, your insurance provider will cover the costs of that accident up to the limit on your policy. The minimum liability limits in Idaho are $25,000 per person and $50,000 per accident. This may seem like a lot of money, but most vehicles cost around $30,000 new so if you total one and have the minimum limits, your insurance won’t cover the entire cost because you only have $25,000 per person. If the accident you cause affects more than one vehicle and is over $50,000 in damages, you will be ordered to pay the remaining balance after your insurance company pays the first $50,000.

Let’s take a closer look. If you’re driving along and lose control of your vehicle and total someone’s brand new Mercedes, Audi, Lexus or BMW, most of which now cost over $100,000, you will instantly be over $50,000 to $75,000 in debt because the liability limits on your policy aren’t even close to the total cost of the damage, and that’s not including their medical costs if the driver or passengers of the vehicle get injured because the medical payments coverage on your policy applies to you and your passengers and any medical payments for the driver or passenger of the vehicle you hit come out of your liability coverage.

Now that we’ve covered liability coverage, lets take a look at uninsured and underinsured motorist coverage. These coverages are self-explanatory, they provide coverage for you should you be involved in an accident with someone who either doesn’t have insurance, doesn’t have enough insurance to cover the costs of the accident or the accident is a hit and run. This coverage is beneficial no matter who you are but is especially beneficial if you drive an expensive vehicle and are worried about being hit by someone with the minimum limits.

Next up is medical payments coverage. As we explained earlier, this coverage is meant for you and your passengers should you cause an accident. If you do not have medical payments coverage on your policy and an accident is your fault, there will be no assistance should you or anyone else in your vehicle sustain an injury. Typically, the maximum limit is $25,000 and the minimum is $2,000 but each insurance company’s policies and limits differ.

To end this week’s analysis, we will go over comprehensive and collision coverage, two very important aspects of an insurance policy. These coverages are optional and are the only parts of the insurance policy where a deductible is required. A deductible is the amount you will pay, also know as coinsurance, towards the cost of the claim. The most common deductible for personal auto insurance policies is 500 dollars, the lower your deductible is, the higher the premium, the higher your deductible is, the lower your premium will be.

Comprehensive insurance is a coverage that helps pay to replace or repair your vehicle if it’s stolen or damaged in an incident that’s not a collision. If your car is parked in your driveway and a tree falls over and damages your vehicle, your comprehensive coverage will cover the damages, vandalism is also covered. Collision coverage covers damages arising out of a collision that is your fault. If you cause an accident your liability only applies to the driver you collide with, collision coverage would help cover the damages to your vehicle. If you collide with an object that isn’t another vehicle, like a fence or wall, collision coverage helps repair or replace your vehicle.

That wraps up this week’s edition of Get to Know Insurance! If you have any additional questions about personal auto insurance, we would be happy to help!

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