Paying for insurance can seem like a drag if you have never been in an accident. In the unfortunate event that it does happen one day, insurance can save you from financial ruin. The question to ask yourself is: How much insurance should I have?
What is the risk?
In the movie Twister, right before heading off to chase tornadoes, the lead character was asked what kind of insurance coverage was on his pickup truck. He admitted that it only had liability. You can guess what happened to the truck.
tornadoes, farm equipment and cows are pretty slim, nature in general is responsible for billions of dollars in vehicle damage each year. Hurricane Harvey, which struck Texas in 2017, damaged up to one million vehicles from its extensive flooding. Hailstorms generate over 250,000 vehicle claims each year. There isn't much data on flying cows specifically, but large animals are involved in two million collisions with vehicles annually. Just these natural hazards alone prove it's a good idea to have more than the bare minimum of vehicle coverage.
Liability insurance is required by most states (although some demand comprehensive coverage). This proves that you have financial responsibility for any accident involving the vehicle. It does not cover any non-accident related damages, so if a deer jumps out in front of your car or someone steals your convertible, this type of insurance will do nothing to help. In fact, even in an accident, it may not be enough to take care of you.
For example, if you are hit by someone who was clearly at fault, you may be expecting that you'll get paid immediately. This is only true if they're carrying enough insurance to cover the damage to your vehicle. If they are not, you'll be paying for those repairs out of pocket.
Now let's say that you are having a bad driving day. You mistakenly hit the brakes on a wet curve, lose control of the vehicle and hit a tree. Legally speaking, you were just in an accident with yourself. Again, with just liability insurance, you are responsible for damage to your vehicle.
If you want more coverage, there are many choices available. Comprehensive insurance covers those random acts of nature. Whether a rock hit your car because it was ejected from the back of a dump truck or because it fell from space as an asteroid, it will be covered. It also covers the possibility of human acts such as theft and vandalism.
Collision is another type of insurance that protects you in the event that an accident was deemed to be your fault. This is very important to have, as liability is only meant to protect the other driver in a collision. With collision insurance, it does not matter who is at fault - your vehicle damages will be covered.
There are also enhanced policy add-ons such as medical expenses coverage (MedPay) and personal injury protection (PIP). These offer expanded assistance in the event that you are injured in an accident, allowing you to pay for medical treatment and pay bills if you cannot work.
The price of protection
The cost for insurance varies greatly from vehicle to vehicle and from state to state. As such, there are a multitude of factors that adjusters utilize in order to determine your risk level. Speeding tickets and other violations all point towards reckless or unsafe behavior. Thus, if you have a few of these on your record, expect your premiums to be higher than average.
So should you get full coverage on your car? If your vehicle is older and you do not expect to keep it much longer, you may be fine with liability only. If you put a lot of miles on each year, your exposure is higher, so collision or comprehensive may be a good option. This decision is one that only you can make. We hope the information provided helps you in that process.
At Mike Duman, we understand that owning a vehicle is a major investment and responsibility. That's why we offer various financing options to ensure you get the vehicle you want with a payment plan that works. To learn more about our financing options, contact us today.