Auto insurance is for your protection, providing the financial resources to deal with harm to you and your auto, avoiding catastrophic losses and shielding your assets from liability if you are at fault in an accident. Regardless of where you live, there are common elements of standard auto insurance.

Limits of liability

If you are liable (at fault) in an accident, the liability components of your policy protect you against bodily injury and property damages caused to third parties in the accident, including legal bills. You and other family members covered in your policy are considered first parties. Your insurance company is the second party.

Liability coverage limits are commonly expressed in two ways: single limit and split limit. A single limit is the maximum an insurance company will pay for all third party bodily injuries and property damage. A split limit is expressed as a series of three numbers, such as 100/300/50. The first number, 100($100,000) equals the maximum third party bodily injury coverage per person. The second number, 300 ($300,000) equals the maximum total third party bodily injury coverage per accident. The third number, 50 ($50,000) equals the maximum amount payable for damage to property of others. Some states have established minimum levels of liability coverage you must purchase. But these minimum levels, although legal and inexpensive from a premium standpoint, are rarely sufficient for any household with assets to protect.

Collision and comprehension

Collision coverage pays for damages to your vehicle. The maximum amount of collision protection is usually limited to the depreciated value of your auto, which is not the same as the auto's replacement cost. Collision coverage is normally the most expensive component of auto insurance. If you can afford it, you can cut your premiums by selecting coverage with high deductibles, say $500 or $1,000 for example, meaning that you pay this amount of collision-related repair costs and your insurance pays the rest, up to the determined value of your vehicle. Comprehensive coverage pays for non-collision damages to your auto, including theft, glass breakage, vandalism, animals, falling objects, and natural disasters. Check with your agent about deductibles.

Remember, payment is made for what your auto is currently worth (it's market or "book" value), so it's helpful if you have a rough idea of this amount. This knowledge can help you determine the best deductible for your policy. The National Automobile Dealers Association publishes the Official Used Car Guide, which is updated each month. Many public libraries have copies.

Medical payments

Pays medical expenses for people covered under your policy ("first party" expenses). These expenses can stem from accidents in your auto, accidents in other vehicles driven (with owner permission) by you or other family members and auto injuries when you or family members are pedestrians. These payments are made regardless of who is at fault, but your insurer may seek to recover the loss from the other party if that party is liable for the accident.

Underinsured and uninsured motorists

Underinsured coverage pays for injuries if you are hit by a driver who's bodily injury limit is not sufficient to pay your medical bills and is lower than the amount of liability insurance you carry. Uninsured coverage pays for injuries if you are hit by a driver with no auto insurance, and includes injuries from a hit-and-run motorist. Costs are relatively little and these coverages are required in many states. Uninsured and underinsured property damage coverages are also available.

Discounts

Discounts are made available depending on certain factors. A good driving record, plus auto safety and/or security features help reduce premiums. Most companies offer a discount when you place both your auto and home insurance with them.

Add-on Features

Several supplemental auto coverages are available, either as separate premium items or included in augmented policies. Here are some examples:

Rental reimbursement, a common add-on, covers vehicle rentals required because your auto is damaged or stolen.

Towing and labor coverage for charges in case of a road breakdown is also common.

Auto loan/lease coverage, an add-on that provides coverage for the difference between the unpaid balance and the actual cash value of the vehicle (in the event of a total loss). Certain conditions and requirements apply.

Automobile death indemnity and total disability is a relatively new coverage, and quite inexpensive. Contact us for details.