Nearly everyone is required by law to carry car insurance, so it is likely you have and pay for insurance every month. If you have not yet made a claim on your car insurance, you probably will at some point in the future. Not all car insurance policies are the same, and it is important to understand the different types of coverage as well as auto insurance lingo so you can purchase a policy that protects you without spending extra on what you don’t need.
With the exception of New Hampshire, every state requires drivers to carry car insurance policies. Even though almost everyone has car insurance, many people don’t fully understand some of its provisions.
A better understanding of basic coverage types and definitions associated with car insurance can give you the knowledge you need to make a smart choice when buying your insurance. Here is the information you need to make sure you are saving on your car insurance.
When we think of insurance, we normally think about it protecting us from unfortunate situations that could be costly. Car insurance can pay for damages done to your car, but the real reason insurance is required by law is to protect other drivers in the event that you are the cause of damage.
For example, if you rear-end someone at a stop sign, causing damage to the other person’s car and possibly injury to the driver, your car insurance with pay for the repairs and for any hospital bills that are a result of the accident. Your insurance protects you financially in this situation. So, the primary function of your insurance is to protect you from being sued by another party. This is why, even if you are driving a beat up old car that is not worth much, you still need to carry insurance.
Conversely, if you were crossing the street when a driver ran a red light and hit you, if that driver did not have car insurance, you would be responsible for paying your own hospital bills. You would then have to try and sue the driver who hit you, but even if you win the suit, there is the possibility that the driver simply does not have the money. In this scenario, you are just out of luck because the driver neglected to purchase the required car insurance.
A typical insurance policy covers six basic provisions, four of which we will define first. The final two provisions will be discussed separately because they are easily confused.
Liability coverage is part of almost every auto insurance policy available. This part of your insurance will cover any vehicle or property damage that you caused in any auto accident.
If you are at fault in an accident that results in any injury or death of the other party, your bodily injury coverage will take care of the costs associated with the injuries. It will cover any medical bills and costs, claims for loss of income, and any pain and suffering damages that may be incurred. It is important to remember that bodily injury liability only covers the other party’s medical expenses- but not yours.
If you cause any damage to another person’s property while driving your car, the property damage liability portion of your auto insurance will cover the costs of the damage. While this coverage generally pays for damage to other vehicles, it also extends coverage to damage of property such as landscaping or real estate. Many states do require this liability coverage in a car insurance policy. Just like with bodily injury coverage, property damage liability does not cover your own vehicle or property.
This portion of your insurance policy will cover your car if someone who does not have car insurance damages it, or if that person is under-insured and cannot pay for the extent of the damage. Uninsured and under-insured coverage encompasses both liability and collision.
These two provisions are easily confused, so we are defining them separately from the other four provisions of basic car insurance. Here is everything you need to know to understand the difference between comprehensive and collision coverage.
This type of coverage refers to damage done to your vehicle as a result of any incident that is not a collision. It covers things like theft, vandalism, and weather-related damage like flooding, falling tree limbs or hail damage. It is very important to read exactly what is covered under your policy’s comprehensive coverage because not all policies cover the same incidents.
Just as the name suggests, collision insurance covers any damage caused to your vehicle in a collision with another vehicle. Collision insurance differs from the property damage liability discussed above because it covers damage to your own car, regardless of who was at fault in the accident.
While we will discuss deductibles and premiums in greater detail later, it is important to know that both collision and comprehensive insurances have deductibles. With a lower deductible comes a higher premium and vice versa. Below we will talk about how to save on premiums by choosing to raise the deductible.
Law does not require the following provisions to car insurance, but it is important to understand what these terms mean. Many of these are very inexpensive and have a lot of value to add to your car insurance policy.
You can add medical coverage to your insurance policy to help cover any of your potential medical expenses. If you find yourself in an accident that requires you seek medical attention, medical coverage can help pay the bills if you have a high-deductible health insurance policy or no health insurance. You may want to consider adding this depending on what type of health insurance you currently carry.
If your car is either stolen or damaged, rental reimbursement covers can really come in handy. It pays for you to receive a temporary rental car while your car is out of commission. If you cannot afford to miss work due to your car being in the shop, then rental reimbursement coverage is a good option.
If your car breaks down on the side of the road, towing and labor coverage will pay for your car to be towed to the mechanic. It usually covers other types of roadside assistance such as flat tires or battery jumps.
This type of coverage is sometimes called an umbrella rider. If your car is totaled in an accident, gap insurance will pay you the difference between the book value of your car and the amount you still owe on your car loan if that amount is higher than what the car is currently worth. If your car is completely paid off, this type of coverage is unnecessary, so check before you purchase gap coverage.
The amount of required car insurance differs from state to state. There are usually three numbers that represent the coverage requirements, and they are expressed in the format XX/XX/XX. Here are the meanings of those three numbers:
The amount of car insurance you need to carry depends on which state you are living in as the minimum requirements vary greatly. If you live in New York, the insurance requirement is 30/60/25, which means you will need $30,000 in bodily injury coverage for a single person, $60,000 in bodily injury coverage for all persons injured, and $25,000 to cover any property damage in an accident. These numbers vary greatly, and in Florida, the minimum coverage is 10/20/10, in California the minimum is 15/30/5, in Illinois it is 25/50/20, and for Texas, it’s 30/60/25. This gives you a good picture of how you need to consider what your specific state requires.
Most people elect to purchase only the bare minimum of what is required by their state. Depending on your net worth and assets, you may need to purchase more than the minimum to ensure you are adequately protected in the event of an accident.
The deductible on your insurance policy is the amount of money you will pay upfront before your insurance begins to cover the claim. The premium refers to how much you pay yearly to carry your insurance policy. Many people choose to lower their annual premium by choosing a higher deductible for their plan. This can be an effective way to save on your premium costs, but it can also cause trouble if you make your deductible too high to handle. For example, raising your deductible from $500 to $1000 could save you around 20% on your annual premium. A jump from a $250 deductible to $2,500 could mean a 50% savings. Though the savings look good in these examples, don’t be too quick to raise your auto insurance deductibles. You should make sure you are financially able to cover the deductible in the event of an accident.
So, if your current deductible $500 and your premium is $1,500 per year, you could save around $300 yearly by increasing the deductible to $1,000 from $500. However, if you find yourself in just one accident during that year, you will be paying an additional $500 in your deductible for only $300 in premium savings. If you have plenty of extra money sitting in savings, then it may be safe to risk the higher deductible, but if you are living paycheck to paycheck, a high deductible can be a financial disaster.
Always make sure you are purchasing the coverage you need to protect yourself rather than relying on just the state minimums. These minimums don’t offer complete protection for every person in every situation.
Many times, there are discounts and benefits for your car insurance if you elect to attend traffic school. Depending on your state, attending traffic school can reduce or eliminate increases in insurance premiums if you are at fault in an accident. In addition to insurance discounts, attending traffic school, whether online or in a classroom, can improve your driving skills and knowledge of road rules. It is a good way to learn how to prevent accidents and traffic violations that can affect your car insurance costs. In some states, attending traffic school can even reduce the points incurred on your driving record in addition to lowering your premiums.
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Rain Does WHAT?
Drivers need to know how to handle many situation before they lead to trouble – from driving on ice to handling their vehicle correctly during a slid. Even the most mundane issue can cause dangerous conditions. A car with foggy windows may not seem very serious, but it can easily cause a life threatening accident.
No matter what type of climate you live in, you will have to worry about foggy windows. In warm climates or cold climates, foggy windows can make it difficult to see and dangerous to drive. Learning how to deal with this problem will make you a safer driver.
What causes your windows to become foggy?
Foggy windows are the result of two factors: temperature and the air’s moisture content. When it is cold outside and you turn on your heater, you are creating an environment encouraging foggy windows. Any warm moisture from inside the car which comes in contact with the cold glass, will cause condensation and fog your windows. If the outside air is hot, and you turn on the AC, you have the opposite situation. The hot outside air meets your cooler windows resulting in fog.
The causes are different, but the result is the same – blurry windows and hazardous driving. The next time you have foggy windows, try the following methods of clearing your windows.
How to clear foggy windows when it is cold outside.
The best way to prevent fog from forming on your windows is to use a product specially designed to help eliminate the problem Car dealerships and hardware stores often sell these defoggers and the staff can help you choose the right one for your car. Simply apply these solutions to your interior windows before there are any problems, and you won’t have to worry about blurry windows this winter.
If you did not plan ahead, there are some quick fixes to this problem.
How to clear foggy windows when it is hot outside.
Unlike foggy windows caused by cold weather, hot weather fog forms on the outside of the car’s windows. There are some simple fixes to this problem.
Whether your foggy windows are due to hot or cold weather, fixing the problem will make you a safer driver. Being safe while being on the road is the responsibility of every driver.
Poor visibility from foggy windows is just one of the many weather-related issues drivers need to know how to handle. Becoming educated in safer all-weather driving can make you more confident when you are behind the wheel. It is a good idea for all drivers to learn how to be safer in bad weather. Taking a traffic school course focusing on driving in adverse conditions is a wonderful step in becoming a better driver.
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Many parents have mixed emotions when their teenager receives a driver’s license. The feeling of pride that their child has accomplished a major step in life is often tempered by a fear their child may be involved in an accident. For many parents, the terror of getting a call from the police that their children have been in a car accident becomes all too real. The Center For Disease Control and Prevention reported drivers between 16 and 19 years old are the most likely to be involved in a car crash. In 2010, over 280,000 teens were admitted to emergency rooms in the US due to an auto accident.
How to reduce the risks of injury due to a car crash.
For parents who are worried about the high risk of auto accidents involving young drivers, there are ways you can help to protect your teen. If you are planning on purchasing a vehicle for your child, make sure the car is safe. There are several safety features which reduce the chance of injury if your teen is in an accident. Before you buy a car for your new driver, consider getting one with at least some of the following features:
Car safety means getting your hands dirty.
It is not enough to have safety features in your child’s car, these systems must be maintained. Make sure the vehicle is inspected as required by professionals. Teach your child how to do routine car maintenance and make sure it gets done. All drivers should know how to:
Education is still the greatest defense against driving tragedies.
Having the best safety features in your teen’s car help, but without proper driving skills and common sense, your child is still at a greater risk for being injured from an accident.
Make sure your teen follows some these simple rules when they drive and you can help to decrease their chance of becoming another tragic statistic:
Developing the skills needed to drive safely and confidently take practice. Enrolling your teen into a driver’s ed course, even after he has received a license, is a smart idea. A Driver’s Education course teaches students the best ways to drive safely, even under adverse situations. Your teen will gain the security of knowing what to do in many hazardous conditions, making him a better driver for life. In addition to becoming a good driver, many insurance companies offer steep discounts for customers who successfully complete these courses.
Good parents will always worry when they see their children pulling out of the driveway, but with the right preparations, they can worry a lot less.
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If you’re driving a newer model car, you’ve probably got some pretty advanced technology sitting in there. This technology is designed to potentially save your life when things get awry on the road. Keep on reading to find out what you need to know about your car’s technology to get the full benefit from it.
Imagine being in the helpless situation of losing control of your vehicle. You’re sliding due to black ice, running over wet leaves and losing traction, or driving through deep water. You may want to hand the wheel to someone else right when it starts to happen, but the reality is that you have to navigate your own way out of it. That’s where electronic stability control (ESC) can save you.
When ESC activates, your brakes are applied only to the correct wheels that will get you back on your intended path. There are some caveats, however. ESC can’t operate outside the laws of physics, and it can’t make up for big user errors, such as challenging fate by setting out with worn tires or going over the speed limit in dangerous conditions. However, if your car is still in good condition, and you’re driving safely, ESC can be your hero and help to save your life. The government gives credit to ESC for over 2,200 lives saved in a 3-year timeframe.
If you’re expecting ESC to be on your side in these dangerous situations of winter, you should check to see if your car even has it. In the middle of the 90s, ESC was starting to be put into higher-end cars. According to the National Highway Traffic Safety Administration, in 2006, a third of vehicles had ESC. Government laws require over half of vehicle manufacturers to have ESC after September of 2008. In 2012, pickup trucks and SUVs were also required to have it.
When turning on your car, you may see a light that says "ESC." Before the name was standardized, ESC may have been called ESP, VSC, DSC, or VDC.
You should know that ESC is not the same as traction control. The latter is designed to keep the wheels from spinning while you are accelerating on slick roads. This system is different from ESC, and your vehicle may contain both. Many cars have the option to turn off traction control, but you probably won’t be able to turn off ESC.
Utilizing your car’s ABS is pretty simple when you remember the 3 S’s — stomp, stay, and steer. First, stomp down the brakes. Next, stay in that position, leaving your foot firmly on the brake pedal, and then steer your vehicle to get yourself back on track. After ingraining those three words in your mind, you can safely navigate your way out of many situations.
Practicing these skills will only help when a real situation arises and you have to use them; therefore, head to a large, vacant parking lot to practice these skills at a low speed.
Statistics from the mid 90s show that over half of vehicles were equipped with ABS. You’ll usually find a light for ABS on your dash, and if you have ESC, you probably have ABS as well.
When ABS and ESC are used in conjunction with a collision management system (CMS), driver safety goes up. A CMS system is designed to put pressure on the brakes when data show that an accident might be coming. You’ll hear a different name for it from manufacturer to manufacturer, but it doesn’t require much work from you. All you’ve got to do is ensure your tires are in good shape and drive safely for the given conditions. And remember, never text and drive!
The CMS works by using sonar, radar, or lasers to calculate the distance between you and someone in front of you. Thus, the ABS will become activated if your car determines a crash may occur, reducing your speed.
You can find out more about driving on the road safely and how to utilize your car’s technology by enrolling in a defensive driving course. Talk to us today to enroll in the next program!
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