In Wisconsin, many people own auto insurance, even though it is not required by state law to carry it. While many people enjoy auto insurance policies, there are many who do not know what their policy provides coverage for. The following guide will be a basic overview of coverages available on an auto insurance policy and I will also provide some recommendations on what limits of insurance to carry.
Limits of Liability: Each auto insurance policy carries limits of liability. I like to describe liability insurance as “coverage for the other guy.” This portion of your auto insurance policy provides monetary limits that will be paid out in the event of an accident that you are legally deemed responsible for. In most cases, these limits are broken down into three categories: Bodily Injury per person, Bodily Injury per occurrence, and Property Damage. Generally, your policy will list three numbers that recount how many thousands of dollars your policy offers under each category.
For example, if your liability limits are listed as 100/300/100, this translates as $100,000 is the maximum amount your policy will pay out for bodily injury damages sustained by any one person in any single occurrence. $300,000 would be the maximum paid out for bodily injury damages sustained by all people in any single occurrence. Lastly, $100,000 would be the maximum paid out for any damage you do to someone else’s property in any single occurrence.
Recommendation on choosing your liability limits.When choosing your liability limits on your auto insurance policy, there are a couple things to keep in mind; the rising cost of health care and the “sue-happy” society in which we live. The state of Wisconsin requires that you carry limits of at least 25/50/25, however, this is NOT adequate coverage. If there are injuries resulting from an accident in which you are legally liable, $25,000 will not last long in a hospital these days. Also, if there is a law suit brought against you for the accident, $25,000 will be gone very quickly as well. My recommendation is to carry liability limits of at least 250/500/100 and possibly supplement your auto insurance policy with a Personal Liability Umbrella policy which would give an extra $1,000,000 of liability protection.
Medical Expense: This coverage is optional. It provides a limit for medical payments if you or anyone in your vehicle is injured in an accident, regardless of who is at fault. The limit that you choose will be provided on a per person basis.
Recommendation on choosing your medical expense limit.Even though this coverage is optional, I would recommend taking it, as it is very inexpensive. Even if you have health insurance and feel you have no need for this coverage, you never know if your passengers carry health insurance or not. Also, even if you have health insurance, many times you need to meet a deductible before anything will be paid out. Medical Expense coverage has no deductible. I recommend choosing a limit of $10,000 or higher. If your policy has a limit of less than $10,000, your policy will pay medical expenses for up to a year. However, if your policy limit is more than $10,000, your policy will pay medical expenses for three years. For a few extra dollars, you get two years of extra coverage.
Uninsured Motorist: Every auto insurance policy includes this coverage. This limit in your policy provides coverage for bodily injury for you and your passengers if you are hurt in an accident with an uninsured driver, as long as they are at fault. Similar to liability limits, this coverage is displayed on your policy in two categories: Bodily Injury per person and Bodily Injury per occurrence.
Recommendation on choosing your uninsured motorist limit. Many people state their uninsured motorist limit equal to the liability limits they carry. My recommendation would be to choose limits equal to or higher than your policy’s liability limits. The reasoning for this is simply, why take care of someone else better than you take care of yourself and your passengers?
Under Insured Motorist: This coverage is optional. This coverage is very similar to Uninsured Motorist and provides coverage for bodily injury for you and your passengers if you are hurt in an accident with a driver who does not carry enough insurance to cover your medical bills. This limit is required to match the limit set in your policy for Uninsured Motorist.
Recommendation on choosing your under insured motorist limit. Even though this coverage is option, I would recommend including it in your policy. Generally, the cost is about $2.00 a month, which is a small price to pay for the peace of mind it provides in knowing that you are taken care of even if there are irresponsible drivers on the road.
Comprehensive: This coverage is optional. Many people refer to comprehensive coverage as providing coverage against “acts of nature.” Some examples of covered instances would be windshield cracks, deer hits, hail damage, vandalism, etc. Your policy will list a deductible for this coverage, which means that you will be responsible for a set amount of money if there is a loss, and your insurance company will pay for the remaining reasonable costs to fix or replace the vehicle.
Collision: This coverage is optional. This coverage will cover repairs or the replacement of your vehicle minus any depreciation, if you are in an accident that is deemed your fault. If you carry this coverage on your policy, similar to comprehensive coverage, you will have a deductible, or plot amount of money you will be responsible for before the insurance company will pay for the remaining reasonable costs left over for the repairs or replacement of your vehicle.
Recommendation on choosing whether or not to carry comprehensive and collision coverage: The first step is to ask yourself several questions about your vehicle and your financials. Is your vehicle over ten years old? Do you have a loan on it? How noteworthy would your vehicle be worth as blue book value? Would you be able to afford to pay for damages out of pocket if your vehicle was severely damaged or needed to be replaced? If your vehicle is over ten years old, unless it is in immaculate condition, it may not be worth paying extra for comprehensive or collision coverage. However, if you level-headed have a loan on your vehicle, the bank usually will require you to carry this coverage on your policy, no matter what the value or age. Also, if your vehicle is not worth powerful anymore due to mileage, condition, or age, it may not be worth paying the premium for these coverages as compared to what you will actually get for the vehicle if something happens to it. A good rule of thumb is that if you can afford to get small repairs or replace the vehicle out of pocket, you should not carry these coverages, as it will cost you more money in the long run.
Emergency Roadside Service: This coverage is optional and usually varies from company to company. Many times it will include towing costs up to a sure distance or amount of money if your vehicle breaks down. Also, some policies may also cover costs for a locksmith and labor costs when you hurry out of gas or get a flat tire.
Recommendation on whether or not to carry emergency roadside service coverage: Many people carry this coverage on their auto insurance policies as it is usually the least expensive route when compared to companies who offer towing packages, such as AAA. However, if you have a package through AAA or through the dealership you purchased your car from, it would not be necessary.
Rental Reimbursement: This coverage is optional. If you carry this coverage on your auto policy, you will be allotted a specified amount of money to put towards a rental vehicle if your car is being repaired due to a covered loss. Many times the coverage will be listed in two categories: maximum payout per day and maximum payout per occurrence; for example, 30/750, means you would have $30 to build towards a rental vehicle per day with a maximum of $750 paid out per occurrence.
Recommendation on whether or not to carry rental reimbursement coverage: You should carry this coverage on your policy if you would have no other vehicle to use if yours was being repaired. Again, AAA or similar companies may offer this coverage in their packages, and if you have a package that includes it, it is not necessary to include this coverage in your auto insurance policy.
Overall, each auto insurance policy may be worded a bit differently and each person has a different need for the limit of insurance and which coverages they carry on their policy. The best advise would be to perform sure and schedule a yearly insurance review with your agent, as life changes, and your policies should withhold up. You agent will make sure your limits are adequate and that your policy includes personalized coverages that fit your particular needs. If you do not have an insurance agent or your agent does not provide these services, it is best you fetch another company, as you can pay really cheap rates…but chances are your coverage will fall short when you really need it and most people work too hard for a living to take that chance.
Filed under Mercury Auto Insurance by on Feb 24th, 2011. Comment. 
As a archaic Insurance Producer, I am well aware that insurance can seem complicated and difficult to understand. Why are there so many different names for different coverages? Why do they sound so cryptic? Why does my car seem to cost so much? It is can be very difficult some people to pay hundreds of dollars a year for a product, especially when they don’t understand what it is they’re paying for. So here are some important things you need to understand about auto insurance.
1. What does “state minimum coverage” mean?
Every state has certain minimum amount of insurance they require citizens to carry. This coverage is your liability coverage, the amount that the company will pay to someone else if you afflict them in an accident or damage their car. In most states, coverage looks something like this: 15/30/10. While this may look like some crazy futuristic date, the numbers actually stand for the fifteen thousand dollars the company will pay per person you injure, thirty thousand dollars for the total accident, and ten thousand for and damage to vehicles or other property caused by the accident. The 15/30/10 model is Arizona’s minimum coverage requirements, but every state has different laws requiring different amounts of liability coverage.
Remember, liability does not cover you if you’re hurt or your car is damaged; only others in accidents that are your fault
2. What coverages cover me and my car?
There are many different bells and whistles you can add onto your basic liability coverage (the only coverage required in most states). The most current are called Collision coverage and Comprehensive coverage.
Collision coverage is self explanatory. If you are hit by something or you pain your car by running into something, your insurance company will pay for the amount to fix your car, minus your deductible. A deductible is an amount for which you choose to be responsible in case you need repairs. The most common deductible today is $500, but some people like to increase their responsibility to $1000, making their insurance premiums lower.
Comprehensive is the coverage that pays for your glass and windshield repairs and any other damages besides collision damage. Comprehensive coverage is also subject to a deductible, but you usually have the option to take a $0 deductible for glass coverage, which means you are not responsible for anything when you need to replace your windshield.
There are also coverages like additional medical expenses, tow truck coverage, rental car coverage. For those on a budget, these coverages often overlap with something you may already have (such as AAA or your health insurance) or may simply be unnecessary.
3. What is uninsured or underinsured motorist coverage?
Uninsured and underinsured motorist coverage allows you to have a backup plan for injuries you might sustain in an accident with a driver who is not insured. If an uninsured driver causes you injuries, you can recover from your auto insurance to help pay for your medical bills. Underinsured works the same device, just for those drivers without enough insurance to pay for all of your bills.
In some states, there is also uninsured motorist coverage for damage to your vehicle.
4. My insurance seems really high-priced, what can I do?
There are several things you can do to ensure you save yourself money on insurance.
-Cut out unnecessary coverages that may be on your policy. Some people haven’t looked at their insurance in 20 years and have no understanding that the coverage they bought in 1987 is completely unnecessary.
-Check with your agent to survey if your policy is up to date. Most insurance companies update the types of policies they offer every few years (something only the companies themselves understand, consumers can’t tell the difference) to ensure market competitiveness.
-Do you have a teenage driver? They cost a lot of money, no matter what company insures you. Most companies offer good student discounts for 3.0 or above GPAs, so encourage your young drivers to get a (or tell them they can’t drive until they have a) good report card.
-Are you no longer a teenager, but not yet 25 years traditional? Insurance becomes cheaper after your 25th birthday, and after you get married. This is because after age 25, people are less of a risk, as are married drivers.
-Shop around. Then go back to your modern company and see what they can do for you. If you have an agent, they will try to fudge the numbers to see what works best for you and what can save you some money.
5. Do I really need an agent, or can I trust those 1-800 number or website type companies?
That really depends on what kind of service you’re looking for. If you don’t really feel like you need a one on one relationship with an agent, you don’t care whether you talk to the same person when you call, or you never think you’ll talk to anyone at all, insurance like Geico, Esurance, and others might work best for you. On the other hand, if you like to drop by and pay your monthly bill in person, call frequently, or have a difficult policy (a commercial policy or multiple cars, RVs, etc) you may want to determine and agent that can help you when you need it. Often times the costs is dependent upon the driver, not the company. So having an agent won’t cost you more, even though some companies like to make you believe that plot. If you have tickets or accidents, of course your insurance will cost more.
If you follow these tips and understand your coverages, you will be less likely to pay for things you don’t need, and you’ll be able to save hundreds of dollars on your insurance!
Filed under Mercury Auto Insurance by on Jan 20th, 2011. Comment.
