Personal Auto Insurance Buyers Guide

What Do I Need to Know about Car Insurance Types Before Purchasing Auto Insurance?

Purchasing auto insurance and finding out which carrier and insurance options work best for you can be quite overwhelming because it’s hard to know where to begin.

Therefore having our personal auto insurance buyer’s guide will help and teach you the basics of auto insurance such as:

• reasons why you need auto insurance
• auto policy coverages
• methods to use to find out the financial ratings of insurance carriers
• the legality of a contract with an automobile insurance policy

What Is Car Insurance and Do I Need It?

Car insurance can provide financial security in case your car has been stolen or damaged, if you are involved in an accident, and especially if you are at-fault in an automobile accident.

When you purchase an auto insurance policy, you are purchasing financial protection against all of the “what-ifs” when it comes to your vehicle.

YES. You do NEED car insurance:

1. Most states require that you carry at the least a minimum limits liability policy
2. Your lender or leasing agent may require auto insurance on your vehicle especially if it’s a new car 

There are many car insurance types, but if you do not have at least the bare minimum, you will have to pay out of your own pocket for the costs of repairs on your vehicle, the other people involved in the accident, etc. This could set you back tens of thousands of dollars.

In a nutshell, car insurance and the different types of car insurance will:

• help protect yourself
• help protect your passengers
• help protect others on the road

Auto Policy Coverages and Car Insurance Types

There are many different types of coverages or types of protections you can purchase on a car insurance policy.

There are some that are required, and each state will set their own state minimum or liability limits, while some car insurance coverage types are not mandatory.

Your auto insurance policy is priced out and based on the limits and coverages you choose.

Car Insurance Types: Liability Coverage

Liability Only insurance can still entail a number of different coverages. Your insurance agent will always ask you if you want or need the following added to your “Liability coverage.”

• Bodily Injury Liability– This coverage pertains to third-party injuries caused by you and family members listed on the policy.  This coverage is required by state law.  
• Property Damage Liability-This coverage pays for damages you cause to someone else’s car or objects and structures that your car hits. Also required by state law.  
• Uninsured motorist coverage– reimburses you if an uninsured or a hit-and-run driver hits you. Underinsured motorist coverage pays when an at-fault driver does not have enough insurance to pay for your loss fully. Some states may require it.
• Medical Payments or Personal Injury Protection (PIP)-This coverage pays for treating injuries to you and your passengers. Personal Injury Protection (PIP), which is available in “no-fault” states, can also cover lost wages and funeral costs. Some states may require it.

You may check with your state DMV or Insurance Department to see what coverages are required.

Car Insurance Types: Physical Damage Coverages

When asked if you need “full coverage” insurance, this simply means you are adding collision and comprehensive coverage to your liability on your car insurance policy.

Collision-This coverage pays for damage to your car from a collision with another vehicle, an object or a pothole or from flipping over.

Comprehensive–This coverage compensates you for damage to your car that’s not caused by a collision. It covers theft, hail, windstorm, flood, fire and hitting animals.

Comprehensive coverage also pays for damaged windshields. Some companies will not charge you a deductible for windshield repairs.

Comprehensive and Collision coverages are required if you have a lienholder(making payments) on your vehicles.

Other Car Insurance Types: New Car Insurance

If you have a vehicle that is a one model year or newer, then it is possible for your auto insurance company to offer you new car replacement coverage.

Usually, new vehicles go down in value quickly so without this coverage you may not get enough if you file a claim settlement to replace your car when or if it is totaled.

The importance of this insurance is to compare and pay the difference between the vehicle’s worth and potentially the cost of a similar model. 

Other Car Insurance Types: Gap Insurance

Typically vehicles, especially new ones, decrease in value the moment they exit from the lot after you purchase or lease them.

Due to this devaluation, Gap insurance would be needed if you want to cover the difference between your vehicle’s devaluation price and your loan amount.

Moreover, getting gap insurance can be obtained from your lender; and it is also available from your insurance company as an endorsement on your insurance policy. 

But, your insurance policy may and can limit how old a vehicle can be to qualify for the insurance.

Plus getting gap insurance from the lender is typically more expensive then getting it from an insurance company.  

Other Car Insurance Types: Roadside Assistance Coverage

Roadside assistance in most cases is almost always optional.

Just because you ask for “full coverage,” this does not automatically mean you have roadside or towing coverage included.

Also known as towing coverage, this coverage is used to pay for tows and service calls,  if you need a tire changed, or if you need gas brought to you.

Most insurers offer additional types of coverage, such as towing and a rental car when your car is disabled. 

Each type of coverage likely will increase your premium so consider what you need.

Other Car Insurance Types: Rideshare Insurance

This type of coverage is needed for individuals who are uber of lyft drivers that need insurance between the commercial car insurance policy provided by your employer and your personal car insurance.

However individual insurance policies do not cover the transport of paying customers from one place to another.

Additionally, employer provided insurance only applies to the state minimum requirement and typically sets restrictions on said coverage.

In other words, if you were to get into an accident with only your employer insurance, and if you, your vehicle, or other people are injured, you may accumulate a high out of pocket expense.   

Auto Insurance Buyers Guide: Important Reminders about Car Insurance Types

Most auto policies do not cover optional equipment such as stereos, CD players, navigation systems and cell phones not permanently installed in your car, or maintenance for your vehicle.

Auto insurance will not pay off your loan if your car is totaled and its market value is less than what you owe. This is the reason auto dealerships and finance companies may offer guaranteed auto protection (GAP) insurance.

If driving into Canada, you will have insurance coverage. However, if you are driving to Mexico, you will need to buy Mexican auto insurance.  

Some companies will require a separate policy for:

• Motorcycles
• All-Terrain Vehicles (ATVs)
• Off-Road Vehicles
• RVs
• Commercial Vehicles

Auto Insurance Buyers Guide: Rating Factors to know About

Insurance companies look at a variety of factors when determining your auto insurance rates:

Check out these 32 questions that determine your auto insurance premiums to see what else affects your car insurance rates.

Need Additional Car Insurance Types? Shop Around!

Before you buy, it is best to get a few quotes from different insurance companies.

 At A Plus Insurance we are an independent insurance agency which means we work with multiple carriers to bring you the best rates possible.  

As a consumer it is important that you research the companies you are working with, you can look up the financial ratings of insurance carriers on sites such as:

• A.M. Best Co. ( www.ambest.com) 908-439-2200
• Fitch Ratings (www.fitchratings.com) 800-893-4824
• Moody’s Investor Service, Inc. ( www.moodys.com)
• Standard & Poors (www.standardandpoors.com) 800-523-4534
• Weiss Ratings (www.weissratings.com) 877-934-7778
• Want to know what our customers are saying about us? Check out their testimonials here.

In addition it’s also helpful to understand and remember to have the necessary information such as your license, vin number, model of the car, and your driving record so the process of finding a good policy will go by seamlessly . We are always ecstatic and happy to help you whenever you need it! 

Car Insurance: The Responsibility of the Buyer

• It is important to recognize that an automobile insurance policy is a legal contract.

• It explains your rights and responsibilities and those of the insurance company.

• Keep your policy in a safe place at home and know the name of your insurer.

• There is also essential information regarding payments and filing claims.

We are always here to answer questions you may have, please feel free to contact us!

Car Insurance Types: Helpful Links

12 Ways to Lower Your Car Insurance Rates

What Exactly Is Full Coverage?

List of Insurance Carriers We Work With

Car Insurance Types: Frequently Asked Questions