Auto Insurance Information

What is Auto Insurance?

Auto insurance protects you against financial loss if you have an accident. It is a contract between you and the insurance company. You agree to pay the premium and the insurance company agrees to pay your losses as defined in your policy.

Auto insurance provides property, liability and medical coverage:

  • Property coverage pays for damage to or theft of your car.
  • Liability coverage pays for your legal responsibility to others for bodily injury or property damage.
  • Medical coverage pays for the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses.

An auto insurance policy is comprised of six different kinds of coverage. Most states require you to buy some, but not all, of these coverages. If you’re financing a car, your lender may also have requirements.

Most auto policies are for six months or a year. Your insurance company should notify you by mail when it’s time to renew the policy and to pay your premium.

Why do you need auto insurance?

It’s really all about protecting yourself financially.

  • If you’re in an accident or your car is stolen, it costs money, often a lot of money, to fix or replace it.
  • If you or any passengers are injured in an accident, medical costs can be extremely expensive.
  • If you or your car is responsible for damage or injury to others, you may be sued for much more than you’re worth.
  • Not only is having insurance a prudent financial decision, many states require you to have at least some coverage.

Questions to ask your agent

Your Independent Agent is an advocate for finding auto insurance that meets your specific needs. Here are a few things to consider as you prepare for the discussion:

  • How much can you afford to pay if you get in an accident? (To keep premiums low you may want to have a higher deductible and be willing to pay more for repairs.)
  • What is the insurance company’s level of service and ability to pay claims?
  • What discounts are available? (Ask about good driver, multiple policy and student discounts.)
  • What’s the procedure for filing and settling a claim? (Ask who to call and what happens after you file a claim.)


Other-Than-Collision Insurance (Comprehensive Insurance)

  • This coverage pays the policyholder for loss or damage to his or her auto for perils such as fire and theft.   It is available with a deductible that may be increased for premium savings.

Collision Insurance

  • This coverage pays the policyholder for loss or damage to his or her auto by upset or collision.   Like Other-Than-Collision insurance, it is available with a deductible that may be increased for premium savings.

Auto Liability

  • This protects the policyholder and those driving with the owner’s consent against legal liability claims arising from accidental injury or to property of others.  The insurance company pays the costs of investigative services as well as legal and court fees.    Policy limits may be purchased separately for bodily injury and property damage.   For example, $25,000/$50,000 limits means the company will pay a maximum of $ 25,000 per individual claim and a total of $50,000 per accident.   A separate limit will be stated for property damage claims.   These are called split limits.
  • Another option is to buy bodily injury and property damage limits on a combined basis.   For example, a $50,000 combined single limit means the company will pay a maximum of $50,000 for either bodily injury and/or property damage.   Many states have minimum statutory financial responsibility or compulsory liability laws that must be observed when buying auto liability insurance.   Your insurance agent should assist you in complying with these laws.   Many states have adopted no-fault automobile laws.   In these states, the insurance companies will pay the policyholder for certain auto losses resulting from accidents no matter who is at fault.   In return for compliance with the law, these policyholders may be offered protection from lawsuits unless a certain threshold is crossed.
  • In addition, uninsured or underinsured motorist coverage may be available to protect drivers with insurance from the cost of bodily injury and/or property damage incurred in an accident with an at-fault driver with little or no liability coverage.   There are many variations of these products and they differ by state.   Some states may require the purchase of a minimum limit of un or under-insured motorist coverage.   It is important to consult your agent for information regarding these valuable coverages.