Insurance Essentials: What To Carry In Your Car

Driving a car comes with a lot of responsibility, and one of the most important things to have is auto insurance. In most states in the US, drivers are legally required to have auto liability insurance. This insurance covers the cost of damage and injuries caused to others in an accident. The minimum amount of insurance you need to have varies by state, and it's important to know what your state requires so that you can comply with the law and be protected financially in case of an accident.

Bodily injury liability

In the United States, drivers must carry automobile liability insurance to legally drive a vehicle. This includes bodily injury liability insurance, which covers the medical costs of the other driver or their passengers if you are at fault in an accident. It can also cover lost wages if they are unable to work and funeral costs if the injuries are fatal.

It's important to note that bodily injury liability insurance does not cover the medical costs of the policyholder or their passengers. It also does not cover damage to vehicles or property. To protect yourself and your passengers, you may need additional coverage such as medical payments or personal injury protection.

While the minimum coverage requirements provide a starting point, experts recommend purchasing higher limits to ensure adequate protection. In general, it is advisable to have enough coverage to protect your assets and cover potential lawsuits. Umbrella insurance can provide additional protection if your liability insurance limits are reached.

Property damage liability

The minimum amount of property damage liability coverage required varies by state. For example, California requires a minimum of $5,000, Florida requires $10,000, and Texas requires $25,000. If the cost of damages exceeds the amount of your coverage, you will be responsible for the remaining cost. Therefore, it is recommended to choose a higher limit for this coverage if you can afford it.

In addition to property damage liability, bodily injury liability coverage is also required by most states. This covers medical expenses and lost wages for individuals other than the at-fault driver.

Uninsured motorist coverage

While not all states mandate uninsured and underinsured motorist coverage, around half require at least one of these coverages. Even if your state doesn't require it, it's highly recommended for all drivers as it can provide valuable protection in the event of an accident. Without it, you could be responsible for paying your own medical expenses and vehicle repairs out of pocket.

There are two types of uninsured motorist coverage:

• Uninsured Motorist Bodily Injury Coverage (UMBI): This type of coverage typically provides compensation for medical expenses, pain and suffering, and lost wages for you and your passengers. It ensures that you and your passengers receive the necessary medical care and financial support after an accident involving an uninsured driver.
• Uninsured Motorist Property Damage Coverage (UMPD): UMPD provides coverage for repairs to your vehicle if it is damaged by an uninsured motorist. It helps protect you from the financial burden of repairing or replacing your car after an accident.

In some states, Underinsured Motorist (UIM) coverage is also available. UIM coverage includes both bodily injury and property damage protection, providing additional financial support if the at-fault driver's insurance is insufficient to cover all the expenses.

The specific coverages and limits of uninsured motorist coverage can vary by state and insurance provider. It is important to review your policy carefully to understand the details of your uninsured motorist coverage.

Medical payments coverage

• Medical treatments, surgeries, and procedures
• Hospital stays and extended nursing services
• Ambulance and EMT fees
• Health insurance deductibles and co-pays
• Dental procedures and X-rays

It's important to note that medical payments coverage does not cover lost wages due to injuries forcing you to miss work. It also doesn't cover injury to other drivers.

Determining Your MedPay Coverage Needs

When deciding on the amount of medical payments coverage to purchase, consider the coverage provided by your health insurance plan. If your health insurance has high deductibles or doesn't fully cover accident-related expenses, you may want to opt for higher MedPay protection. Additionally, remember that the coverage amount you choose will impact your premium, with higher coverage resulting in a higher cost.

Availability of Medical Payments Coverage

The availability of medical payments coverage varies by state, and it may not be offered in every state. Some states, like Maine, New Hampshire, and Pennsylvania, require medical payments coverage or personal injury protection (PIP) as a part of their auto insurance requirements. In states that don't offer MedPay, PIP coverage is usually available instead.

Collision and comprehensive insurance

Collision Insurance

Collision insurance covers damage to your vehicle in the event of a collision with another vehicle or object. This may include repairs or a full replacement of your covered vehicle. It covers damage to your vehicle from accidents involving other cars or objects, single-car rollovers, and accidents with stationary objects like road signs, guardrails, or mailboxes. The average cost of collision insurance is about $290 per year but can be as high as $814 per year.

Comprehensive Insurance

Comprehensive insurance covers damage to your vehicle caused by incidents other than collisions. This includes damage from fire, hail, vandalism, theft, and natural disasters such as earthquakes, floods, hurricanes, tornadoes, and volcanic eruptions. It also covers damage caused by contact with animals and fallen objects such as trees, branches, ice, or projectiles. Comprehensive insurance is significantly cheaper than collision insurance, with an average cost of a little over $134 per year, but can be as high as $367 per year.

While collision and comprehensive insurance are not required by state law, they are typically required for a car loan or lease. Even if you are not required to purchase these coverages, you may still want them for added protection. Consider the value of your car, the likelihood of getting into an accident, and your current savings. If you live in an area with a high risk of vehicle damage or drive long distances, purchasing both collision and comprehensive insurance is recommended.

Frequently asked questions