21st Century Insurance Coverage Tips

21st Century Insurance Coverage Tips

Coverage Selection Tips

• Should you purchase Collision and Comprehensive coverage?
  California law doesn't require it. But if you financed your car the lender may require it. The answer depends on the value of your car – especially an older vehicle. If the premium is more than a third of the value of the car, you may not want to purchase Comprehensive or Collision at all. Before you decide, think about.
• If your car gets stolen or damaged, and you can't afford to have it repaired or replaced, you need these coverages.
• Deductibles, ranging from $100 to $1,000, are what you pay before the insurance company starts to pay for your car. The critical question is whether you'll have cash on-hand to pay for needed repairs. Don't forget: the higher the deductible, the lower the cost of coverage.
• For a total loss, your insurance typically pays Actual Cash Value (ACV). This can be less than the outstanding balance of your car loan or lease. Ask if the company offers "Gap" coverage for the difference between the ACV and your auto loan balance.
• Choose your Liability (Bodily Injury and Property Damage) limits wisely.
  This pays for injury to other people and property damage to cars when you are at-fault in an auto accident. California law requires you to carry a minimum of 15/30/5 liability insurance. ($15,000 per person injured in an accident, but no more than $30,000 to be split among several or more injured people and up to $5,000 to pay for the other car[s] involved in the accident.) If you lease a vehicle, the company providing your lease may require higher (i.e., $100,000 per person, $300,000 per accident and $50,000 property damage is commonly required) than state minimum liability limits. Remember, loss payments from auto accidents may easily exceed $100,000. Consider spending most of your auto insurance budget on liability coverage because the potential loss amounts are greater.
• Should you purchase Uninsured/Underinsured Motorist (UM/UIM) Coverage?
  This coverage pays for your or your guest passengers' expenses (i.e., medical, funeral, lost wages, disability, compensation for pain and suffering) if someone without (or with too little) insurance hits you. You're not required to buy it, but an insurance company must offer it to you. Some experts suggest UM/UIM limits should match the limits you've chosen for Bodily Injury Liability. So consider the following:
• Recovering expenses (i.e., medical, funeral, lost wages, disability, compensation for pain and suffering) from an uninsured motorist is very difficult. Having some level of coverage to take care of expenses you may have to face can be valuable
• If you don't have full health, life and disability insurance, you must ask yourself how much time and money you'd need to recover from a serious accident. UM/UIM limits of $50,000, $100,000 or more are quite common.
• Should you purchase Uninsured Motorist Property Damage (UMPD) Coverage?
  In the event an uninsured motorist damages your car, UMPD coverage will pay your deductible toward repair costs, if you have collision coverage, or it will pay up to $3,500, if you do not have collision coverage. It's up to you to buy it or not, but auto insurers must offer it to you. This is coverage that protects your car.