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Auto Insurance FAQs

What is the difference between Comprehensive and Collision Coverage?

Collision Coverage

In short, if you get into a crash, collision coverage will help pay for any damages to your vehicle. Regardless of what you collide with—another vehicle, a street sign, a tree, a ditch, a guard rail, etc.— and regardless of who is at fault for the collision, your vehicle will be protected with this coverage.
 
Collision coverage is especially good for people in places that ice over during the winter. Imagine hitting a patch of ice and swerving into a sign. Depending on the speed and severity of the impact, your vehicle could experience significant damage! In this case, any vehicle repair cost that exceeds your chosen deductible would be covered by your insurance. So actually, collision coverage gets you the repairs you need to get back on the road. (This coverage may also be required if your vehicle is being financed or leased by another party.)

Comprehensive Coverage

Comprehensive coverage is also known as “Other Than Collision” coverage. It basically helps pay for any loss or damage to your vehicle NOT caused by a crash. This includes the following:
  • Theft
  • Vandalism
  • Fire
  • Natural disasters – blizzards, hailstorms, extreme winds, earthquakes, floods, etc.
  • Falling objects – rocks, trees, etc.
  • Animals hitting or infesting your vehicle

Although these events may not be as likely as getting into a fender bender, they do tend to be costly. In any of these cases, comprehensive coverage will protect you from having to pay anything higher than your deductible. (And as with collision coverage, comprehensive coverage may be required if you are leasing or financing your vehicle.)
 

It depends.
 
Let’s start with the fact that you’ve got an old car. Remember, the maximum payout for comprehensive coverage tends to be the cash value of your vehicle. (For an estimate of your vehicle price, click here: http://www.nadaguides.com).
 
So let’s pretend your car is totaled in a flood. How would your maximum payout compare with the monthly premiums you would be paying if you had comprehensive coverage?
 
When the overall cost of your premiums starts to outweigh the cost of your car, you might want to save your money for something else.
 
Some experts suggest dropping comprehensive when the premium costs 10% or more of the potential payout. For example, if your car cost $4,500 and if your premium runs more than $450 per month, it may be time to stop investing in comprehensive coverage.
 
However, it’s important to understand that dropping comprehensive coverage means you are responsible for the FULL cost of vehicle repairs or replacement in case of an accident. So make sure you are prepared to pay out-of-pocket in case of an incident.
 
Note: If you took out a loan to purchase your vehicle, your lender will likely require that you have comprehensive insurance. Likewise, if you are leasing your car, you will likely be required to have comprehensive coverage.
 
Still Not Sure What to Do?
 
Contact a National General Insurance agent at 1-800-325-1190 to get the help you need today.

The answer depends on how you answer the following questions:
 
What are your state requirements?
Each state has specific minimum requirements for auto insurance. It’s important to know your state requirements before choosing your coverage so that you are compliant with the law. You can find these by checking with your local DMV. Or a National General Insurance agent can also research state specific requirements on your behalf.
 
Did you lease or finance your vehicle?
Lending or leasing companies typically try to protect their investments. As a result, they will often require you to purchase collision and comprehensive insurance for your vehicle. Once you pay off the loan on your vehicle, however, you could lower your auto insurance premiums by dropping collision or comprehensive coverage.
 
What type of vehicle do you have?
Consider your vehicle. It’s a good idea to let factors like size or safety features influence the type of insurance you purchase. For example, if you have a large SUV instead of a compact car, you might want to invest in better property damage liability coverage in the event of an accident because a larger vehicle tends to cause more damage.
 
Who will you allow to drive your car?
In general, it’s a good idea to list any licensed drivers in your household on your auto insurance policy, along with anyone who could drive your car. That way, in case of an accident or damage, you’ll be covered. Anyone in your household who will never drive your vehicles is safe to exclude from your insurance policy.
 
How comfortable are you with risk?
Insurance is all about measuring risk with your pocketbook. If you are trying to save a bit of money short term, you might be willing to live with a higher amount of risk on the road. If you have been financially burned by not having enough coverage in the past, you might be more willing to spend in monthly premiums to get peace of mind in case of an accident. Deductibles and coverage limits are both subject to how you approach risk.
 

Deductibles
Your deductible refers to the amount you agree to pay out-of-pocket before the insurance company takes over. So let’s say that crashing into a mailbox costs $500 in damages to your car. If your deductible is $400, then you pay $400 and your insurance covers the remaining $100. The higher the deductible, the lower your monthly insurance rate runs. Conversely, the lower the deductible, the higher your monthly insurance rate is.
 
Coverage Limits
A coverage limit refers to the maximum the insurance company will pay for a given situation. Anything exceeding this cap would be your financial responsibility. Although it may be tempting to go with a lower coverage limit, it may be costlier in the case of an accident. Would you have the ability to pay for damages that exceed your insurance coverage limits? If not, consider a higher limit.
 
Still Have Questions? Contact a National General Insurance agent to determine the best insurance coverage for your situation!

Nearly every state requires a minimum amount of liability coverage as part of your auto insurance policy. Liability coverage has two components: Bodily Injury Coverage and Property Damage Coverage.
 
Bodily Injury Coverage
 
This coverage protects you in the event that you:

  • Injure a pedestrian, a driver, or a passenger
  • Cause a fatality with your car

This coverage helps pay you for:
  • Medical Expenses – This helps cover any emergency services, hospital care, follow-up visits to the doctor, crutches, etc.
  • Funeral Costs – In case of a fatality, this would help cover the cost of the funeral.
  • Lost Income – Say you seriously injure a person who works in construction. Because of the accident, that person may not be able to physically perform at his job for several months. Bodily injury coverage would help compensate the man for his lost wages during those months.
  • Legal Fees – If an injured party sues you as a result of an accident, bodily injury liability would help cover the cost of your legal counsel.

 
Property Damage Coverage
 
As the name implies, property damage coverage helps pay for damages you caused to another person’s property – i.e. their vehicle, mailbox, fence, house, store, etc. It’s important to note that property damage coverage does not help with the repair of your own car. (You would need collision coverage for that.)
 
How much liability coverage do I need?
 
Insurance companies provide coverage up to a specific limit. Your job is to decide what that limit will be. The lower the limit you choose, the better your monthly premiums will be. However, this may end up costing you in the long run. For example, let’s say you set a limit of $25,000 for property damage coverage. If you cause an accident that totals a $30,000 car, you would pay the amount that exceeded the limit—in this case $5,000. And with bodily injury coverage, where lawsuits and hospital bills are concerned, it may be wise to go with a better protection plan that has a higher limit, even if it means a higher premium.
 
A good rule of thumb is to choose liability coverages and deductibles that take into account your personal financial situation, the type of car you drive, and the amount of risk you are comfortable with. For more on liability coverage, contact your National General Insurance representative today!


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