Personal Auto Coverage
If you want to drive a car, you have to have auto insurance. That’s the law. But there are some important things to understand when it comes to auto insurance, including what you have to have by law, what you have to have if you have a car loan, and what you really should have if you want to be fully protected.
Let’s start with the state minimums. To be a legal driver of any motorized vehicle driven by a licensed driver in any state you have to have Bodily Injury Property Damage (BIPD) liability insurance. This is insurance that protects you in the event a third party claims that you are legally liable for an accident that caused bodily injury or property damage.
Here are the state minimum limits:
- Indiana: 25/50/10
- Ohio: 12.5/25/7.5
But what do those numbers mean?
The first thing to understand is that they are all in the thousands. ($25,000, $50,000, $10,000)
The first number (25/XX/XX) refers the amount of bodily injury liability coverage an insurance company will pay on your behalf per person per accident.
The middle number (XX/50/XX) is the total amount an insurance company will pay on your behalf for the entire accident. *Note: Insurance companies will not pay more than $25,000 for any one person as the first number states.
The last number (XX/XX/10) represents how much property damage liability coverage you have. This is for any property damage you are responsible for causing in any one accident.
Keep in mind this is liability coverage only. This does not include damage to yourself or your property (your car) if you get into an accident. The state only requires you to have coverage for damage you cause to others.
Recommended Liability Coverage
As we’ve already talked about, the state requires you to carry the coverages outlined above. But, the truth of the matter is, if you are liable in anything larger than a fender-bender, the state minimums will not cover you adequately. The amount of coverage you carry is ultimately up to you, and something we will work through with you through an individualized cost/benefit analysis, but we typically recommend you carry 100/300/100. This level of coverage will help ensure you are left holding a hefty bill because your coverage wasn’t adequate.
Now that we’ve talked about what you have to have to be legal to drive any vehicle, let’s talk about what it means to have full coverage. This is the type of coverage you need if you want to cover yourself and your vehicle, you’ll also be required to have if you have a car loan. The lienholder (person or entity to whom you owe money) wants to make sure their interests are covered. That’s why liability insurance is not enough in this case.
Full Coverage includes the following:
This type of coverage protects you if an insured vehicle is damaged in an accident that involves overturning the vehicle or striking another vehicle or stationary object (building, telephone pole, guardrail, etc.).
Comprehensive Coverage (Other Names: OTC, Other than Collision)
Just like its name implies, this covers damage to an insured vehicle caused by a variety of risks, including theft, vandalism fire, lightning, hail, and flood.
Personal auto insurance includes (or can include) a couple of other handy coverages.
Medical Payments (Med Pay)
This is our favorite coverage! Most people have no idea what it is or if they have it. Everyone has it, and this is very important coverage to understand. This coverage offers you coverage for any injuries sustained by you or a passenger in your vehicle NO MATTER WHO IS AT FAULT. The insurance company will pay up to the amount of coverage you have. We typically offer $5,000 in coverage but this coverage can be increased or decreased based on your decision.
Towing coverage is a coverage that is typically only offered if you maintain full coverage. This is“add-on” type coverage and usually never comes included in an auto package. If you have liability only (BIPD) coverage most (if not all) companies will not allow you to add this coverage (because they aren’t covering your vehicle for any damage).
Much like towing coverage this is also a voluntary coverage that you can elect to have with full coverage. If you have full coverage then it is typically included (for a nominal fee) but is not given with the policy coverage. Also like towing, if you have liability only (BIPD) coverage most (if not all) companies will not allow you to add rental car coverage (because they aren’t covering your vehicle for any damage).