The Next Step: Insurance Options After Auto Coverage

If you're looking to get a new car, you'll need to consider insurance. In most cases, it's best to purchase an insurance plan before buying a new car to ensure you have enough coverage. You can get a car insurance policy before you buy a car, as long as you know the make and model of your future vehicle. If you already have a car insurance policy, it can be updated to cover your new car, but your rates will probably change. It's important to be familiar with your auto policy before you need it and to read it carefully.

Liability insurance

Auto Liability Insurance

Auto liability insurance is a legal requirement for drivers in many places, including California. This type of insurance covers the cost of injuries or damage caused to others in an accident that is your fault. It is important to note that auto liability insurance does not cover injuries to the policyholder or damage to their own property. The minimum liability coverage in California is $15,000 for the injury or death of any one person, $30,000 total for the injury or death of multiple people in an accident, and $5,000 for damage to property. Driving without insurance is illegal and can result in fines, suspension of your license, and impoundment of your vehicle.

General Liability Insurance

General liability insurance, also known as business liability insurance, is a type of insurance that protects businesses from claims arising from their normal business operations. This can include bodily injuries, medical payments, damage to rented property, and advertising injuries. For example, if a customer slips and falls in a business premises and requires medical treatment, general liability insurance can help cover the costs. This type of insurance is not usually required by law, but it is strongly recommended as it can protect a business's finances and assets in the event of a lawsuit. The cost of general liability insurance varies depending on the specific needs of the business, but on average, it costs around $67 per month or about $805 per year.

Garagekeepers Liability Insurance

Garagekeepers liability insurance is a specialized type of insurance that covers damage to cars that are being serviced or repaired. It is often included in general liability insurance policies for businesses in the auto industry, such as repair shops and car washes. This type of insurance can help cover the cost of repairs if a mechanic accidentally damages a customer's car while it is in their care.

Collision insurance

When purchasing collision insurance, it is important to understand what is covered and what is not. Collision insurance covers damage to your vehicle caused by a crash with another driver, a collision with an object such as a tree or mailbox, or your car rolling over. It also covers damage caused by uninsured or underinsured drivers. However, it does not cover damage to your car from non-traffic events, such as hitting a deer, extreme weather, or theft. It also does not cover damage or injuries caused to others while driving, medical costs from injuries to yourself or your passengers, personal belongings inside your car, or normal wear and tear.

If your car is damaged but not totalled, collision insurance will pay for the repairs, minus your deductible. If your car is totalled, collision insurance will pay the actual cash value of your vehicle, minus your deductible. In the event that your car is totalled and you have a loan that is more than the value of your car, you will still be responsible for paying the remaining balance on the loan. In this case, it is advisable to consider purchasing gap insurance, which can help cover the difference and pay off the loan.

When deciding whether to purchase collision insurance, it is important to consider the age and value of your vehicle. Collision coverage becomes less valuable over time, as it will never pay out more than the car's value. For older cars with low market value, collision coverage may not provide significant benefits in the event of a total loss. Therefore, it is recommended to research your car's worth before deciding whether to opt for collision insurance.

Comprehensive insurance

The specific incidents covered by comprehensive insurance vary, but they generally include weather-related damage, fire and explosions, vehicle theft and vandalism, accidents involving animals, and glass and windshield repair. It is important to note that comprehensive insurance does not cover collisions with objects like trees or buildings; separate coverage is required for those incidents.

When considering whether to add comprehensive insurance to your policy, it is essential to evaluate your personal circumstances. Ask yourself if your vehicle is valuable, if you live in an area prone to weather-related events or car theft, and if you can afford to pay for repairs or replacement out of pocket. If the cost of repairs or replacement is high, or if you prefer the peace of mind that comes with being covered against unforeseen events, then comprehensive insurance may be a wise investment.

Uninsured motorist coverage

There are two main types of uninsured motorist coverage: Uninsured Motorist Bodily Injury (UMBI) and Uninsured Motorist Property Damage (UMPD). UMBI provides compensation for medical expenses, pain and suffering, and lost wages for you and your passengers. Meanwhile, UMPD covers repairs to your car and other property, such as your house, fence, or personal items. In some states, underinsured motorist (UIM) coverage is also available if the at-fault driver's insurance policy limits won't cover your damages.

The amount of uninsured motorist coverage you need will depend on the value of your vehicle and the extent of coverage you want. You can usually add more coverage in increments of $5,000, and it is recommended to have enough property damage coverage to replace your vehicle. It's important to review your policy and understand the limits of your UM coverage.

Overall, uninsured motorist coverage provides valuable protection and peace of mind in the event of an accident with an uninsured or underinsured driver. By having this coverage, you can ensure that your medical expenses, vehicle repairs, and other related costs will be covered.

Medical payments coverage

Unlike health insurance, medical payments coverage has no deductibles or copayments. It starts paying from the first dollar of incurred expenses. However, it does not cover costs that exceed the policy's stated limit, childcare expenses during recovery, or wage reimbursement for time lost due to injuries. Additionally, it does not cover injury expenses for the driver and passengers in another vehicle if you are at fault; separate bodily injury liability coverage is available for this scenario.

In summary, medical payments coverage is a valuable addition to your insurance policy, providing financial protection for medical and funeral expenses resulting from auto accidents, regardless of fault. It ensures that you and your loved ones receive the necessary medical care without worrying about immediate out-of-pocket expenses.

Frequently asked questions