Auto Insurance: Dumb Stuff Covered Or Not?

Auto insurance is designed to protect you financially in the event of an accident, paying for repairs to your car and treatment for your injuries. It also provides liability coverage if you are at fault for an accident that causes injury or property damage to others. While auto insurance covers a wide range of scenarios, there are some dumb situations that may not be covered. For example, personal items stolen from your car, such as laptops or phones, are generally not covered by auto insurance. However, renters, homeowners, or condo insurance policies may provide coverage for these items. Additionally, maintenance or repairs due to electrical wear and tear are typically not covered by auto insurance. Understanding your auto insurance policy and its limitations is crucial to ensure you have the necessary coverage in case of any unexpected events.

Comprehensive coverage

The cost of comprehensive coverage varies depending on factors such as your age, driving record, the value of your vehicle, and the state you live in. According to the National Association of Insurance Commissioners, the average annual comprehensive insurance premium for drivers in the U.S. in 2019 was $171.87, with California having the lowest average of $96.53 and South Dakota the highest at $347.61.

Collision coverage

The cost of collision coverage varies depending on the value of your car and the potential cost of repairs. When choosing a collision deductible, consider the cost of repairs and your willingness to pay for them. A higher deductible will lower your monthly premium, while a lower deductible will provide more coverage in the event of an accident.

In the event of an accident, collision coverage provides peace of mind, as you won't have to pay out of pocket for repairs above the cost of your deductible. It also covers your loss if your damaged vehicle is deemed a total loss. Additionally, adding certain coverages, such as a deductible fund, alongside collision insurance can potentially reduce your costs for repairing or replacing your vehicle.

Overall, collision coverage is an essential component of auto insurance, providing financial protection and peace of mind for drivers in the event of a collision.

Liability insurance

In the United States, liability insurance is a mandatory requirement for vehicle owners in California. The state's Department of Motor Vehicles (DMV) specifies the minimum liability insurance requirements, which include $15,000 for injury/death to one person, $30,000 for injury/death to more than one person, and $5,000 for property damage. These requirements will increase as of January 1, 2025, to $30,000, $60,000, and $15,000, respectively.

In summary, liability insurance is a crucial aspect of auto insurance and business operations. It provides financial protection in the event of accidental harm caused to others and helps individuals and businesses manage the risks associated with their activities.

Personal property coverage

It is important to note that comprehensive car insurance, which covers theft and damage to a car, does not cover personal belongings left inside the vehicle. Comprehensive coverage only applies to permanent, pre-installed features of the car, such as the ignition system, windows, and rearview mirrors. Therefore, in the event of theft or damage to personal property, individuals must rely on their homeowners, renters, or condo insurance policy for coverage.

To ensure adequate protection, individuals should review their insurance policies and confirm that their personal belongings are listed on the appropriate insurance policy. Additionally, when travelling with valuable items, it is advisable to take precautions such as hiding valuables and removing electronics from the vehicle to reduce the risk of theft.

Furthermore, it is worth mentioning that property damage liability insurance is a mandatory coverage type for drivers. This insurance covers the cost of damage caused to others' property, such as their car or house, in the event of an accident. However, coverage for damage to one's own property falls under comprehensive and collision coverage, which are separate insurance options.

Gap insurance

When you buy or lease a new car or truck, the vehicle starts to depreciate in value as soon as you drive it off the lot. Most cars lose 20% of their value within a year. Standard auto insurance policies cover the depreciated value of a car, which is the current market value of the vehicle at the time of a claim. However, in the early years of ownership, the amount of the loan may exceed the market value of the vehicle.

To qualify for gap insurance, you must have comprehensive and collision coverage on your policy. Gap insurance is typically offered by car dealers and insurers, and it can be added to your auto insurance policy for a small annual fee. While it is not required by any insurer or state, some leasing companies may require you to purchase it.

Frequently asked questions