How much car insurance do you need to protect your income and assets? It is a question that every driver will face at some point. The answer can be different for everyone since car insurance is not one-size-fits-all. However, the most important thing to remember is that your policy is designed to protect you and everything you have worked hard to attain against financial loss. This article will explain how having the right limits, and the right type of coverage can go a long way toward a more secure financial future.
Money to Fix Your Lost, Stolen, or Damaged Car
Here in Arizona, driving is the primary method of transportation for most people. Whether you own your car, lease your car, or have it financed with a loan, you rely on it to get you to work, run errands, and handle other responsibilities. If something were to happen to your car, you could lose everything you have invested in your vehicle. Fortunately, your car insurance can include protection against physical damages to your vehicle in the form of collision and comprehensive coverage.
Drivers in Arizona are not required to purchase collision and comprehensive insurance, but many opt for this important protection since it could save thousands of dollars in the event of an accident. It is worth noting that drivers who lease their vehicles or make payments on a car loan are usually required to maintain physical damages coverage to satisfy the terms of a lease or finance agreement.
Collision vs. Comprehensive – What’s the Difference?
Both collision and comprehensive insurance provide coverage for physical damages to your vehicle. You need both types of coverage to protect your vehicle against unexpected damages fully. They will pay to repair your vehicle or otherwise compensate you for your loss if your vehicle is damaged beyond repair. Where they vary is in the circumstances that lead up to your claim. Collision will pay for damages caused by car accidents, whether you run into another vehicle or run off the road and into a tree. Comprehensive insurance will pay for damages caused by other types of events, such as a hail storm, vandalism, or a run-in with wildlife.
Unlike other coverage types on your policy, collision and comprehensive insurance do not have any limits to choose. Your vehicle is automatically insured for its actual cash value. That means that your insurer will reimburse you for the loss of your vehicle based upon its value at the time of the collision or other covered incident. The exception to this rule applies to the collector and antique vehicles, which may instead be insured for an agreed value.
The one decision you will have to make is how much of a deductible to choose. Deductibles typically apply to claims for damages to your vehicle, whether collision or comprehensive. It could be as little as $100 or as much as $1,000 depending on the insurer. Lower deductibles are less burdensome when filing a claim, but higher deductibles can translate to lower premiums. An agent at our office will be happy to help you select a deductible amount that is right for you.
Money to Pay for Damage to another Person’s Property
When you cause a car accident, the damage is not always limited to your vehicle. When your vehicle hits another person’s car or personal property, you could become responsible for thousands of dollars in repair or replacement costs. The State of Arizona requires that all drivers carry a minimum amount of property damage liability insurance for this very reason. Unfortunately, the minimums required by law are not always enough to protect you against a lawsuit.
Here at Vanyo Insurance Group, we have seen first-hand the effects of being underinsured. One day it’s a car plowing into someone’s living room. Another day it might be a driver who falls asleep at the wheel, crosses the center line, and runs into a brand new 2017 Jeep Trailhawk. These types of scenarios could easily cost $40,000-$50,000 plus court costs and legal fees.
If you only had $10,000 in property damage liability protection, how would you pay for the damages that exceed the limits on your policy? Even though a victim’s insurance company may pay for initial damages, you could still be sued for compensation for damages.
Compensation for Harm You Cause Others
At Vanyo Insurance Group, we’ve seen our fair share of serious accidents. When they involve other victims besides the at-fault driver, the costs can quickly spiral out of control. At-fault drivers are financially responsible for the injuries they cause, as well as any other losses resulting from those injuries. If you are completely or partially at-fault for a collision, you could be sued for medical bills, emotional distress, rehabilitative costs, and lost income due to disability. Furthermore, a jury could impose punitive damages on you – especially if you exhibited gross negligence or were found to be intoxicated or texting at the time of the accident.
Here in Arizona, all drivers are required to purchase car insurance that includes a minimum amount of bodily injury liability protection. However, the minimum limits are far too low to provide any significant protection in the event of a serious collision. Considering you are still financially responsible for any damages that exceed the limits on your policy, we recommend Scottsdale area drivers to purchase much more than the minimum coverage necessary. Without adequate limits, nearly everything you have – your savings, investments, and income – could be at risk of liquidation or seizure.
Split Limits vs. Combined Single Limit (CSL)
Insurance companies offer two different types of bodily injury liability limits. Some feature split limits, which are two different numbers that represent in thousands the amount of money an insurer will pay toward the cost of injuries per individual and per accident. In other words, a 15/30 split provides up to $15,000 of coverage per injured individual and up to $30,000 total available bodily injury liability protection for all injured victims in an accident. A combined single limit, or CSL, is less restrictive, instead offering a single coverage limit with no caps on individual limits. In other words, a 300 CSL on your policy would provide $300,000 in total bodily injury liability coverage to be divided among victims without limitation.
Money to Protect You and Your Passengers against Uninsured or Underinsured Drivers
Car insurance should work to protect you and your passengers. Perhaps the most important coverage you can purchase is that which shields you against the negligence of others and assures you have access to the medical care you need – even if an at-fault driver is uninsured or does not have enough insurance to pay for it. Uninsured motorist protection covers injuries to you and your passengers when you are hit by a driver that has no bodily injury liability protection. Another important protection – underinsured motorist protection – fills in the gaps when the cost of your injuries exceeds the liability limits on the at-fault driver’s policy.
Money to Help with the Smaller Things
How much is your health insurance deductible? If you are injured in an accident, having a few thousand dollars can provide major financial relief while you seek medical care. Medical payments coverage compensates you for your injuries in an accident, regardless of who is at-fault. It is just one way you can reduce your financial burden after an accident by getting insurance for the ‘small things.’ From rental car reimbursement to tow truck charges, we here at Vanyo Insurance can help you assemble the right types of coverage to minimize your losses after a collision or other covered event.
Beyond Car Insurance
If you cause a car accident that results in major injuries or loss, even the highest liability limits might not be enough to cover the damages. Umbrella insurance can extend your liability protection with supplemental coverage that picks up where your primary coverage leaves off. In other words, if you are sued for $750,000 and only have $500,000 in liability coverage, you can look to your umbrella policy to pay the excess damages that exceed your car insurance limits. Umbrella insurance is very affordable and typically provides $1 million or more in supplemental liability protection. We recommend that all drivers consider adding this important coverage to their insurance portfolios.