Before you know about the liability limits for bodily injury or how to select the right uninsured motorist coverage without falling into the traps that lie in wait, you have probably already experienced that seemingly many times in chaos on the roads. It is during this time that it struck me that driving, for all its technology and mechanization, is a perpetual battle with chaos.
The deductibles slide into the conversation like a surprise bill. A deductible is not just a number; it is an indication of your willingness to handle the shock of an unexpected expense. The higher the deductible, the more admonition you have for preparing to handle financial shocks. The lower the deductible, the more assurance you have, or should have, to handle debt if the need arises. People typically think of insurance companies as trying to steal money, but really, they want people to be committed to them; for insurance companies, commitment means believing the driver will pay the deductible without hesitation when the insurance coverage kicks in after the collision. Thus, selecting the correct deductible is about self-awareness, not the price of the deductible or cost of insurance.
New drivers should have been presented with the notion of complete car insurance earlier on; nevertheless, this information happens to fit within the current context of deductible amounts versus disaster situations. It will take more than just hopeful thinking to stop an enormous tree limb from falling through the windshield of a car; therefore, comprehensive coverage will come into play when unpredictable events occur, such as nature’s fury, vandalism, flooding, or an enterprising thief. Unfortunately, this type of protection seldom receives the recognition until it has saved someone thousands of dollars in repair costs from damages inflicted due to unforeseen catastrophes.
For now, let’s examine collision coverage before returning to the same basic structure of complete coverage for new drivers. If comprehensive coverage is the yin, then collision coverage is its yang; both provide financial assistance for damages, but each addresses car insurance’s basic purpose in a different manner. Collision coverage will always be triggered after a vehicle sustains any form of impact, regardless if the impact was from a stationary object (i.e., wall, another vehicle parked, guard rail, etc.) or moving object. It is the vehicle owner’s friend who helps them clean up their “mess” without judging them. Therefore, if you do not have immediate plans to purchase a new vehicle, collision coverage is a must, regardless of how comfortable you may feel behind the wheel of your car.
Most readers thinking an explanation of the essentials for auto insurance would be found in the opening paragraph, and to allow them to get it at the end creates disarray as it should. In the insurance realm, Bodily Injury Liability is the moral compass; thus, it protects those that you injure from the financial ruin that would occur if you were to be held liable for a medical bill, attorney’s fees and lost wages because they were injured by your actions (if at fault for being in an accident). Following closely behind bodily injury is Property Damage Liability which deals with the multitude of unfortunate incidents where you misjudge the distance or volume of traffic and crash into something; railings collapse, and mailboxes are damaged or destroyed.
Most drivers do not consider how expensive hitting a high-end luxury vehicle will be to replace until after they do it; the existence of higher limits for liability is the reason for this situation. Setting minimum coverage on a brand-new BMW when encountering it is essentially diving headfirst into a lawsuit.
When at least half of the world was expecting a slow decline or gradual fading away, motor vehicle coverage for the uninsured and underinsured swept in from nowhere. In fact, one out of every eight people in America drives without insurance. Even more astonishing than this figure is that there are many people who only have minimum coverage available to them. Relying on a stranger’s insurance coverage to protect your financial interests is very risky. The uninsured and underinsured motorist protections provide a large amount of protection for you if the other driver’s irresponsibility has caused you to sustain an injury and left you with repair bills for your vehicle.
Personal Injury Protection*, or *PIP*, exists in a unique in-between place. In some states, PIP is mandated as part of your auto policy, while in other states it is optional. Either way, PIP benefits are made accessible to you much faster than health care insurance benefits are—frankly, they will be paid to you before any health care insurance can begin to process your claim because PIP pays for you as you go through the court system. The primary reason PIP exists is to avoid small claims from bogging down court systems; and also so that medical bills do not accumulate while a decision or finding of fault occurs.
We will now discuss what should have been discussed earlier; how much coverage to carry. The pricing of auto insurance can be unpredictably strange at times; often an additional $50,000 of liability can cost less than a single cup of coffee on your monthly bill. For those drivers willing to “Shop” around by comparing quotes and experimenting with combinations of deductibles, as well as considering their insurance as a means of strategically planning for unexpected events rather than just something that needs to be paid, this paradox of “Cheap Safety” crops up frequently.
The focus of this article (which does not really have an ending) will ultimately shift back towards those add-on products which people often do not understand. An example of this is Gap Coverage will cover the outstanding balance of a vehicle loan should a driver be involved in an accident where their car is a total loss. Rapidly depreciating vehicles can create a far more significant financial impact on a driver who has a total loss accident than psychological; however, with the assistance of Gap Coverage, it is possible for individuals to minimize some of that financial burden through the quiet, yet effective, use of this valuable add-on product.
Auto insurance has two main purposes: to pay for all your car’s expenses and to provide a way to control your expenses if your car were to get damaged in an accident.
Rental Car Coverage. If your car is in the shop for a week about repairing it, you’ll spend hundreds of dollars on renting a car. Adding on rental car coverage at a very low cost can help you save that money.
Roadside Assistance. Roadside assistance is provided for a small monthly fee (usually about one dollar per month) and typically covers the most common problems: running out of gas, locking yourself out of your car, or having your battery die.
When you look closely at all the different aspects of auto insurance, you start to see what its purpose really is. Auto insurance is not something that protects you from fear; it gives you control over what happens in case of an accident.
New Hampshire is currently the only state in the United States where car insurance is not required by law. However, in New Hampshire, you are required by law to have some form of financial responsibility for your vehicle in the event of an accident. Therefore, even in New Hampshire, auto insurance can serve as both an important legal document as well as a valuable tool for achieving a financial stability during times of stress.
