Is your auto insurance coverage adequate?

| Auto insurance, Insurance education.

auto insurance coverage adequate

Is your auto insurance coverage adequate? Perhaps more than any other type of personal or business insurance, auto insurance has become increasingly price driven. Consumers seem to value the lowest price over any other factor when shopping for auto insurance.  That’s a shame because, in the quest for the lowest price, proper and adequate auto insurance coverage often becomes a secondary consideration.

Parts of an Auto Insurance Policy

Auto insurance is made up of several types of coverage. Let’s examine the types of coverage available on an auto insurance policy and how they protect you:

Bodily Injury and Property Damage Liability

If you are held legally responsible for injury, death, or property damage, liability coverage will pay for your obligations, up to the policy limit.  This is sometimes referred to as 3rd party liability, meaning it pays injury or damage to other than the named insured. This coverage is provided in two forms – split limit or single limit.  Split limits are very common for a personal auto insurance policy and will specify an amount per person, per accident and for property damage.   For example, a policy that reads “25,000/$50,000/$25,000” would pay up to $25,000 per person for bodily injury or death, but no more than $50,000 per accident.   A maximum of $25,000 is available for property damage liability. Another option for liability coverage is a single limit of coverage that can be applied to injury or property damage and does not have a “per person” limit.   The total single limit can be applied to a single person for injury, multiple persons for the same accident, property damage, or a combination of injury and property damage.  A policy with a single coverage limit will show something like “$100,000 liability coverage”.

Uninsured or Underinsured Motorist Coverage

This coverage is sometimes abbreviated on the policy declarations to “UM/UIM” or something similar.   If you are in an accident with another motorist who is completely uninsured or has inadequate limits to pay for your injuries, this is the coverage you need.   UM/UIM typically pays only for injury claims, although a few insurance carriers offer uninsured motorist property damage coverage as well.

Medical Payments

Do not confuse this car insurance specific coverage with health insurance.    Medical payments does cover hospital expenses and doctor bills, but only for injuries sustained in auto accident.  This coverage is provided regardless of fault and covers the named insured and passengers.   The named insured is covered even if the injuries occur while they are walking or riding a bicycle and are struck by an automobile.   Even if you have good health insurance, medical payments may be worth purchasing.

Physical Damage: Comprehensive and Collision

There are two parts to physical damage coverage.  The first is often called comprehensive or “other than collision”.   Comprehensive covers things like vandalism, theft, fire and glass damage.    Essentially, anything other than a collision with another vehicle or object.   Collision coverage (cleverly named), provides coverage for damage to your car caused by striking another vehicle, object, person or a rollover accident.   

Rental car or loss of use

If your vehicle is rendered unusable in an accident or other covered loss (i.e. vandalism, fire, theft, etc) then rental reimbursement will pay for the cost of a temporary replacement vehicle.   This coverage is provided with a specified amount per day, such as $30, and a maximum amount or number of days, such as $900 or 30 days).

Towing or Roadside Assistance

Personal auto insurance does not cover the cost of repairing a mechanical breakdown, but you can buy coverage to have your vehicle towed to a repair shop.   Roadside assistance coverage will generally pay for services including flat tire change, out of fuel and vehicle lockout.

Special endorsements

These include optional coverage for things like custom parts & equipment, GAP, OEM parts guarantee and much more.  These endorsements vary by insurance company but are worth asking your agent about.

Get a Quote: Personal Auto Insurance

Now back to the original question – is your auto insurance coverage adequate?   To answer that question we need to look at several variables that are different for every customer:

  • How much can you afford?  The best auto insurance policy available is worthless if you cannot make the premium payments. Buying any type of insurance is always a balance between coverage and price.
  • What is your net worth?  When deciding on a limit of liability coverage you should consider how much you stand to lose. The greater your assets, the more liability coverage you should purchase. You may want to consider a personal umbrella policy as well. Remember your auto insurance carrier is only obligated to pay for injury or property damage claims up to your policy limit.  Anything above your policy limit is your responsibility.
  • How much are you willing to self-insure?  By self-insure, we mean your policy deductible or your share of any claim. Raising up your deductibles for comprehensive and collision can dramatically lower your premium. But, those savings are easily overlooked if you are paying for a large deductible at the time of claim.
  • What other insurance do you have?  If you have excellent health insurance and do not often carry passengers, a lower limit for medical payments (or no medical payments) coverage might be appropriate. If you have a disability policy or high limits of life insurance we might look at lower limits of uninsured motorist coverage. Lastly, if you own several vehicles or do not drive much, maybe rental reimbursement is not important.

Is Your Auto Insurance Coverage Adequate?

By working with a qualified and knowledgeable independent insurance agent, you can be assured you are getting unbiased advice and recommendations. At Safeguard Insurance, we work with many different providers of Nevada auto insurance. That means we can find you a policy that fits your needs, at a price you can afford and make sure your auto insurance coverage is adequate. Contact us at 702-638-0022 or visit our auto insurance page for an instant quote from up to 12 different insurance companies.

Safeguard Insurance is licensed to quote auto insurance in Nevada, Utah, California, Arizona, Idaho, Oregon, Washington, and Texas.

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