Do you know how much car insurance you need to protect your income and assets? Do you know the difference between collision and comprehensive coverage? Do you know why you need to carry more than the minimum amount of coverage required by Wisconsin state law? At Van De Hey Insurance, we know how confusing car insurance can be, and we know our clients have questions about their coverage. In this article, we will explore the various types of coverage available for your policy, as well as the reasons why having the right limits is the most important thing when shopping for coverage.
Coverage When You Damage Your Car
If you have car insurance, you have a car. Chances are you invested a lot into your vehicle, whether you leased it, bought it, or financed it. Valuable assets should be protected against possible losses, and that includes your car. If an accident were to happen, it helps to know you can rely on your car insurance to get you rolling again.
An important reminder: if you are ever in an accident that involves another driver, make sure to get the other driver’s name, phone number & insurance company they are with, along with their agent’s name. This is very important since police reports take 5 to 7 business days to receive & because of confidentiality most of the information isn’t on the report.
Two Types of Physical Damages Protection
Car insurance companies separate physical damages protection into two separate types of coverage for personal vehicles – collision and comprehensive. You need both to fully protect yourself against financial loss if your vehicle is damaged, destroyed, or stolen. Together, they ensure minimal out-of-pocket costs, even if your vehicle is a total loss.
Collision insurance takes care of damages to your vehicle that occur in a car accident. This includes single-car accidents, such as hitting a tree or light post, as well as multiple-car accidents, such as highway pileups. Comprehensive insurance covers damages to your vehicle if they occur due to an event other than collision. Examples might include running into a deer in the middle of a rural road or discovering that a tree has fallen on your car during a storm.
Reasons You Need Collision and Comprehensive Protection
There are several reasons for including physical damages protection on your car insurance policy. First and foremost, it is to ensure you can repair your damaged vehicle or replace it if it is a total loss. If you rely on your car for your transportation needs, do not skip this important coverage unless you can afford thousands of dollars to replace it. Secondly, you might need collision and comprehensive insurance to satisfy the terms of a loan or lease agreement. Often, banks and dealers will require borrowers to maintain physical damages coverage as a means of protecting their business interest in the vehicles they own or have a lien against.
It’s easy to add collision and comprehensive coverage to your policy at Van De Hey Insurance. Simply give us a call, and we can help you select your deductible. This is the amount you will pay out of pocket toward the cost of any claim, big or small. Deductibles come in many sizes and are a matter of personal preference and affordability. While a low deductible makes the claims process less stressful, a high deductible can provide upfront savings with lower insurance premiums. Other than your deductible, there is nothing else to decide. Your vehicle will likely be insured for its actual cash value, although antique and collector vehicles are often insured for an agreed value.
Compensation for Damages to Property that isn’t Yours
Another important part of your car insurance policy is the property damage liability coverage. This portion of your insurance helps pay for damages you cause to other people’s vehicles and personal property. Perhaps you drift into another lane, severely damaging a brand new Lincoln Navigator. Maybe you lost control of your car, drove through someone’s yard and into the front of their home. These types of scenarios can cost tens of thousands of dollars in repair and replacement costs – money you would be personally responsible for.
Your liability coverage will only pay for damages up to the limits of your policy. If your limits are too low, you could be sued for any remaining losses unpaid by the insurance company. Unlike the state minimum coverage, which is currently $10,000, a higher limit helps shield your assets against a financially devastating lawsuit.
Compensation for Harm You Cause Others
Property damage liability is not the only damages you may be responsible for after an accident. If there are other people involved in the collision – whether motorists, cyclists, or pedestrians – you could be financially responsible for their injuries. There are medical bills to pay, and you could be sued for the victim’s lost wages and emotional distress. Furthermore, you could face additional financial burdens if a jury places punitive damages on you; this can occur anytime a person is at fault for a collision – particularly if there was negligence demonstrated behind the wheel.
Bodily injury liability insurance is designed to protect you against the financial consequences of injuring another person from behind the wheel. It can pay for lawsuit settlements and court judgments, helping to keep your income and assets intact. Here in Wisconsin, all drivers are required to carry a minimum amount of bodily injury liability protection, but we here at Van De Hey Insurance recommend much higher limits. If you are underinsured, you could become personally responsible for paying any damages that exceed your liability limits. Why put your savings and financial future at risk when higher bodily injury liability limits can minimize your vulnerability?
Split Limits vs. Combined Single Limit (CSL)
The coverage limits you select will be listed on your insurance policy in one of two ways – as a split limit or combined single limit (CSL). A split limit includes two numbers, such as 25/50 or 250/500. The first is the maximum amount in thousands the insurer will pay toward the injury-related expenses of each victim in an accident. The second number is the amount in thousands the insurer will pay for the total bodily injury liability for all victims in an accident. A combined single limit does not restrict the amount of coverage available per individual but instead offers a flat amount of maximum available coverage per accident.
Money to Protect You and Your Passengers against Uninsured or Underinsured Drivers
If another driver injures you, chances are their car insurance will cover your medical bills. In some cases, however, at-fault drivers are uninsured or underinsured, leaving you with uncompensated losses. Perhaps the most important coverage you can purchase for yourself and your passengers is uninsured motorist (UI) and underinsured motorist (UIM) insurance. The first covers you and your passengers if an uninsured driver injures you. The second takes care of unpaid damages more than the liability limits on an at-fault driver’s policy.
Money to Help with the Smaller Things
Besides the cost of property damages and injuries, how much can a car accident cost? There are several ‘small’ expenses that can add up to a major financial burden if you are not covered for them. Here at Van De Hey Insurance, we build personalized car insurance policies to cover everything from towing charges to rental cars. We can even include medical payments coverage that helps pay for out-of-pocket medical expenses, such as your deductible and copay, regardless of who is at-fault for an accident.
Beyond Car Insurance
Some accidents result in more serious liability than others. If you permanently disable a physician just starting out in his career, you could face millions of dollars in compensatory damages for lost future wages. In these cases, even the maximum liability coverage can only cover a fraction of the damages, leaving you with a devastating financial responsibility. In these cases, umbrella insurance can help protect you against financial ruin by supplementing your primary liability coverage. Most umbrella policies are very affordable and provide $1 million or more in additional coverage. We recommend all drivers at least consider adding this type of coverage to their insurance portfolios.