Atlanta Insurance: Understanding your Auto Insurance

When is the last time you reviewed your auto insurance coverage? If it has been longer than one year, it has been too long!

I want to give you an easy to understand guide to your auto insurance policy. I would say that 75% of my customers do not understand their policy and what it means to them.

Auto insurance can be broken up into two parts really; liability and coverage for your vehicle.

Liability

Your liability insurance is what pays a claim when you are a fault in an auto accident. The Georgia state minimum coverage is 25/50/25… look at your policy. If these “limits” show on your policy than you need to raise them ASAP! Lets take a look at what these numbers mean…

25/50/25………….

The first two numbers, generally shown on a policy as your bodily injury liability, specify the amount your insurance company will pay other parties in the event of an at fault accident. The first number, 25, means that the insurance company pays up to $25,000 per person for medical bills. The second number, 50, is the amount the insurance company pays total for all medical bills in an accident. In this case it is $50,000. Neither one of these numbers will take you very far with the high cost of medical care. The last number, 25, is what the insurance company pays for property damage. Again, $25,000 in this case. I’m using these numbers to show you what your policy means but I want to emphasize the importance of raising these coverages. I generally write policies for my clients that read 100/300/100 or 250/500/100. The numbers work the exact same way as I’ve described above. And just to reiterate, this is your liability coverage meaning that if you crash into me… these limits apply to fix me and my vehicle. If someone hits YOU, it is their liability that fixes you and your vehicle. Atlanta Insurance

The next part of your liability is your Uninsured/Under-insured motorist coverage (UM). This coverage is written the same way as your liability portion of the policy – 100/300/100. UM covers you when someone hits you who does not carry insurance or does not have enough insurance to cover the claim. The state Insurance Commissioner’s office estimates that 1 in 5 drivers do not have insurance. It is very important that you carry the proper UM coverage. UM coverage is subject to a deductible (normally 250) if you ever need to use it.

Coverage for your vehicle – “Full Coverage”

The next piece of your auto insurance policy is coverage for your own vehicle. This is generally referred to as full coverage. This portion of your policy consists of both comprehensive and collision coverage. Below is an explanation of each…

Comprehensive – Covers repairs to your vehicle in the event of theft, vandalism, hail damage, windshield repairs, tree falls on your car, etc. Pretty much it is anything that happens to your vehicle that does not involve a collision with something else. The repair is subject to a deductible. My recommendation is to keep your deductible around 250 for this coverage. Many people carry 500. Since this covers stuff that is out of your control, keep the deductible lower. The savings aren’t significant enough to keep the deductible high if you ever need to use the coverage.

Collision – Covers your vehicle in the event of an accident where you are at fault. If you crash into me, your collision coverage pays to repair your vehicle. Remember, your liability coverage fixes me. This is also subject to a deductible. If you do not have any at fault accidents in the last five years, are not accident prone, or do not drive much than I suggest raising your deductible here to 1000 and no lower than 500.

Just to clarify, a deductible is the amount you have to pay before your insurance company will perform repairs. Be sure to keep your deductible at the level you can afford.

There are just a few additional features on an auto policy – Medical Payments, Towing and Labor, Rental Car Coverage (ETE) and GAP coverage. Below is a quick rundown of these features:

Medical Payments – This covers small claims to passengers in your car. Broken bones and Chiropractic bills are just two examples of when this would be used. Generally, you should keep this coverage at 1000 and no more than 5000.

Towing and Labor – Usually a limit of 50. This gets you out of a bind if your vehicle is ever disabled. Check with your insurance company to see the specifics of what they cover with this. Usually this covers flat tires, breakdowns, and sometimes will even help you if you lock yourself out. Again, check with your insurance carrier as this coverage varies.

Rental Car (ETE or extended transportation expense) – If your vehicle needs repaired and you need transportation, this will cover you. Most times, it is read on a policy as 30/900, which means $30/day up to $900 (or thirty days). You can increase this limit as well.

Gap Coverage – This is very important and most people don’t know about it! This covers you for the difference between the value of your car at the time it is totaled and what you owe on your vehicle loan. Lets say you drive a vehicle that you still owe $29,000 on. Lets pretend that your car is worth $23,000 when you total your vehicle or drive off a bridge. Gap coverage protects you from this $6000 difference. Obviously, not everyone needs this coverage but if you owe money on your vehicle, this option is worth exploring.

I know that this was a lot of information for one article and I appreciate your taking time to spend with me! In the near future I will add a file that you can download that will define these definitions and contain some other stuff as well. You can also sign up for my newsletter and don’t forget to bookmark me!

Have a great day and stay safe!