When someone calls my office for a quote, I don’t just give them the lowest coverages for the cheapest price – unless that’s what they ask for. Even then I try to do my job by educating each client to make the best decision for them. Some listen, some don’t. A few weeks ago I had a 68 year old woman tell me that not one person she’s bought insurance from in the past fifty-two years has ever explained to her what she is getting for her money – never educating her or giving her the options to chose things for herself. So here I am going to educate you, make some basic suggestions but as I always say talk to your agent! Ask them questions , ask what they carry, what they suggest – so you can make sure you are adequately covered for your new vehicle purchase.
Personal Liability. Liability insurance is required by the state, it is what you are responsible for – to someone else, if you are at fault for an accident. Each state has it’s own minimum liability requirements. In Ohio the new limits are 25,000 per person / 50,000 per accident.. Do you know what these numbers mean? If you are involved in an at-fault accident, these are the max dollar amounts that your insurance company will pay out for what you are liable for. If someone is hurt, goes to the emergency room, the doctor, chiropractor, misses work so they have loss wages, or even worse if they lose a limb (or a life) the max your policy will pay out is the $25,000 per person. The max paid out per accident is $50,000 – so if there are multiple people injured in this accident, your policy will only pay out $50k total for their injuries. What if the cost of treatment for these injuries and/or pain and suffering exceeds your policy limits? Then you are held responsible. As you know $25,000 doesn’t go far nowadays for medical bills. Anything over that $25,000 per person, or the $50,000 per accident you will be responsible for. Judges will put liens against your home, vehicles, and any assets you may have, as well as garnish wages. One accident could literally financially ruin you for life. Be smart and make sure that you are carrying higher liability limits – you’d be surprised overall how affordable it is. In order to calculate what you need, you need to know your assets. Generally speaking I think you should carry a minimum of $100,000 per person and $250,000 per accident, though if you can afford it I would suggest more.
Property Damage Liability. Again this is another coverage that you are required to carry to have your license. Property Damage Liability is the damages you are responsible for in an at-fault accident. Whether it be another vehicle (or vehicleS), a fence, a building – this coverage is what pays out. Again, you want to protect your assets and make sure you are carrying enough coverage. In Ohio the minimum requirement is $25,000. You could easily exceed this amount by totaling a newer vehicle – imagine if you hit multiple vehicles? Totaled someone’s new Caddy, or worse? I would suggest carrying at least $100,000 in property damage liability coverage.
Medical Payments. Medical payments is what pays for medical bills for you and your immediate family in your vehicle due to an at fault accident. A lot of people try to bypass this coverage “Because they have health insurance”, but you forget about your high deductibles, and how most medical needs that are required because of injuries during a car accident isn’t something you can put off. The state does NOT require you to carry this coverage – so a lot of people just don’t. Let me tell you those emergency room bills, chiropractic visits and meds add up fast. I would suggest a minimum of $25,000 though if you can afford it – more. It’s better to have it and not need it, than need it and not have it.
Collision Coverage. Collision coverage is what covers your vehicle’s damages if you are at-fault, if fault can not be determined OR if it’s a hit and run accident. A lot of people don’t realize this and assume that if someone else hits them, then they take care of it. If that person is uninsured – then what do you do? Collision coverage is the ONLY coverage that will guarantee repairing your vehicle in an accident. There are a lot of cases where incidents happen on private property (think parking lots at the grocery store, Walmart, the mall, etc) where the police cannot cite anyone at fault. If the other person doesn’t admit fault and tell their insurance carrier straight-up they were the at-fault person, their insurance company WILL fight it. If your car is parked and hit – and the police can’t find who did it – again, no one will pay besides your COLLISION COVERAGE. Now all loan companies require you carry this coverage, but I suggest that if your vehicle has any significant value whatsoever you should carry this coverage. Deductibles range from $100 to $2,000 (a deductible is the part YOU are responsible for, what you pay before the insurance does).
GAP Coverage. Not all insurance companies offer GAP coverage (if not, your lienholder should) GAP coverage gives you peace of mind if your vehicle is totaled before your loan is paid off. Ever been upside down on a car loan? Owe more than it’s worth? This can cause big issues if you total your car – the insurance will ONLY pay the value of the vehicle at the time of the loss – not how much you owe. Check with your insurance agent, or loan company to get the rates on GAP coverage for your car.
Comprehensive Coverage. This is one coverage I suggest that EVERYONE carry, even if you have an old beater vehicle. Comprehensive covers anything besides a collision (or maintenance issue) we are talking glass breakage, vandalism, theft, fire, flood, if you hit an animal, hail damage, tree damage etc. The first time you need a windshield replacement, this coverage will pay for itself 10x over. I suggest carrying (if your company offers it) a ZERO deductible. That means NOTHING out of pocket. Your windshield needs replaced? You get it replaced without anything out of your pocket. period. It’s a very affordable coverage, and usually these types of claims won’t affect your insurance rates like a collision claim would. I always suggest carrying that low deductible because the difference between a lower and higher deductible for this coverage is usually VERY minimal.
Towing & Labor Coverage. Unless your new car offers emergency road service for free, or you have some great roadside assistance program, add this to your policy! It’s super cheap and will pay out for a towing or breakdown claim. Usually ranging from $50 to $150 in reimbursement.
Rental Car Coverage. Now this is the one that no one wants until they need it – rental car coverage gives you a rental car, up to a certain dollar amount, if your vehicle is involved in a collision or comprehensive claim. No they will NOT pay for a rental car if your car breaks down, this is only for a covered claim. But soo many people *think* they have this coverage and don’t. Trust me, not needing to worry about getting a ride everywhere while your vehicle is in the shop makes this entire process a lot easier to deal with. Unless you have a spare vehicle sitting in the garage, GET THIS COVERAGE! I don’t care if you think your brother or mother has a car they’d let you use – things always happen at the worst times. They are out of town. Their primary vehicle is broken down, so they are using their extra car. Most insurance companies get you set up 24 hours after your incident, in a rental vehicle.
This article is sponsored in part by Caitlin Chrysler Dodge Jeep Ram Jenkintown PA