The Definitive Guide in Understanding Your Auto Insurance Coverage
Whether you are a new driver getting your first insurance policy or an experienced driver that wishes to understand your auto insurance benefits, requirements better, and options -- we’re here to answer all of your questions. (Even the ones you didn’t know to ask!)
We’ve answered some of the most critical questions you might have when determining the best coverage for you.
What types of automobile insurance coverage do I need to know about?
Auto insurance is a legal contract between you (the policyholder) and your insurance company. Essentially, the policyholder pays a premium to the insurance company. In return, the insurer agrees to pay for any losses as laid out in the individual policy.
Liability Coverage
Liability coverage pays for the policyholder’s legal responsibility to others for bodily injury or property damage. Alabama law requires that two types of liability coverage be included on your insurance policy: property damage and bodily injury.
Bodily injury coverage protects your assets if you’re found legally responsible for a covered accident that includes expenses associated with bodily harm sustained by others. These are the first numbers you usually see on your policy.
Property damage coverage protects your assets if you are found legally responsible for a covered accident. Property damage coverage will cover certain damage you may cause to the property or vehicle of another party. If your policy shows 100/300/100 or 100PD on a separate line – you have $100,000 coverage of property damage caused when you ran that stop sign.
Comprehensive Coverage
This type of Alabama auto insurance coverage can be used to repair your vehicle when physical damage occurs from non-collision-related incidents (subject to deductible). These occurrences can include theft, fire, vandalism, glass breakage, and contact with animals.
Collision
Collision coverage is used to repair your vehicle when physical damage occurs from another car or object (subject to deductible). Collision coverage is generally sold with a $250 to $1,000 deductible—the higher the deductible, the lower the premium.
Even if you are at fault for an accident, collision coverage will reimburse you for the costs of repairing the vehicle minus the deductible.
What is the minimum amount of coverage required by the State of Alabama?
The minimum amount of auto insurance coverage required by the State of Alabama is $25,000/$50,000/$25,000. Broken down, that means that in the event of an insured accident, your limits for bodily injury are $25,000/person with a maximum of $50,000 per incident. The remaining $25,000 is the maximum coverage for damage to another person’s property.
Are the state minimums enough coverage?
If you value peace of mind -- not really.
The problem with state minimums is that often the damage and bodily injury liabilities outweigh the coverage. So while it’s true that only meeting the minimum amount of coverage as dictated by your state will keep your insurance premiums down, there certainly is an associated cost.
In addition to potential bodily injury, finding out you are underinsured after an accident can be financially debilitating. Consider these examples:
Property Damage Scenario: In many states, including Alabama, the property damage limit is $25,000 (or less). That can seem like a lot of money until you look around at the cars in any direction. A bulk of cars surrounding you cost more than $25,000. Now consider if you had hit two vehicles? $25,000 begins to seem like a minimal dollar amount. Consider even further that not all accidents involve other vehicles. Instead, you could be looking at home or building damage depending on the circumstance.
Bodily Injury Scenario: Consider your policy having 100/300 coverage. This means that the most your policy will pay is $100,000 per person, up to $300,000 total per accident. Any injuries sustained up to $100,000 will be paid by your premium. However, if you opted to have a lower liability limit, such as 25/50, your insurance policy would cover the first $25,000. You would be responsible for the remaining $75,000, and that is only if one person is injured.
Which Liability limits give you the most peace of mind?
Paying slightly higher premiums for increased coverage limits can offer the financial protection you will need in case of an unfortunate event. By increasing your auto coverage limits, you can design a policy that protects your assets and provides you with peace of mind.
Most insurance experts recommend that you have limits of at least $100,000 of bodily injury liability protection per person/, $300,000 for bodily injury per accident/$100,000 for property damage (100/300/100).
What should I consider when selecting a deductible?
Choosing a deductible is an individual choice for each policyholder. You’ll need to weigh out the amount of risk you are willing to take with other deciding factors. We also advise you to speak with your insurance agent to make the best decision for you and your family.
Factors you may consider while deciding on your deductible amount:
Financial Stability: A $1000 deductible may lower the cost of your premium but is less helpful if you do not have the cash in savings to pay the deductible in the event of an accident. Selecting a $500 or $250 deductible may be more manageable.
Vehicle Value: More expensive vehicles often cost more to insure. Many opt for a higher deductible for substantial savings.
Driving Risk: Accidents happen to new and seasoned drivers. However, there is a higher risk with more recent drivers or those who have had accidents in the past.
What is the difference between Full Coverage and Liability Coverage?
The difference between liability and full coverage insurance is that liability covers only other people’s injuries and vehicle damage. Full coverage also protects your vehicle.
Complete coverage is a worthy investment to consider when:
You have an expensive vehicle.
A loan or lease secures your vehicle. Full coverage is typically only required in the event of a car lease or financing.
You cannot afford to repair (or purchase a new) your vehicle in the event of an accident or theft.
A word of caution with older vehicles: full coverage is not always worth the cost with a low-value vehicle.
What should I know about rental cars and towing reimbursements?
Accidents and flat tires rarely happen at a convenient time. Getting caught in a sticky situation without coverage to help can be very difficult. Without a personal insurance agent guiding you through each option available to you, it can be easy to gloss over ala cart items that are not a state requirement.
Towing & Reimbursement
Towing coverages and limits vary by each carrier. With this coverage, you pay the cost of towing your vehicle to a repair shop when it cannot be driven and are reimbursed up to a set dollar amount as specified in your policy. Each policy is unique and will have mileage and cost parameters to follow.
Rental Car
Rental car coverage helps pay the cost of a rental car when your car’s damages are covered by comprehensive and collision claims on your policy. This optional coverage can be helpful when your vehicle is affected by an accident, theft or vandalism, or natural disaster.
It is essential to understand the details of your policy, as many have daily and maximum limits. For example, your rental reimbursement coverage may have a limit of $50 per day or $750 per accident. This would mean that the insurance policy would only pay $50 per day with a maximum of $750.
In the event of an accident, how do medical payments work with myself and those around me?
In an accident, medical payment coverage will help pay for medical expenses that result from a car accident. These expenses can include medical treatment, rehabilitation, funeral costs, and dental care. The benefits cover all people in the vehicle at the time of your collision.
Please note that medical payment coverage does not include wage reimbursement for missed work or injury to other drivers.
What is Uninsured Motorist Protection?
If you are in an accident, at no fault of your own, your policy will cover your expenses. Unfortunately, all too often, drivers are uninsured, leaving you at risk for high costs.
Uninsured Motorist Protection can help protect your assets if you are in an accident caused by an uninsured driver. This optional coverage can be a significant benefit to all auto insurance policyholders.
What other coverages may be available to my vehicle?
Speaking with your insurance agency is the best way to determine what other options are available to your policy for consideration. These may include Medical benefits or Family compensation, among others.
Medical benefits
This insurance option may cover reasonable and necessary medical expenses or funerals for you and others who are covered under your policy in an accident, regardless of who is at fault. The amount of these payments is set within your policy.
Family compensation
Family compensation may cover medical, confinement, and/or death benefits to your relatives in the event of an accident -- regardless of fault.
Why should I choose Bentley Insurance for my auto insurance needs?
We know that when it comes to insurance providers, you have options. Bentley Insurance is an independent insurance agency that has been serving customers in Alabama for 30 years. As an independent agency, we have the ability to provide you with the best coverage and pricing to meet your particular needs. We offer a choice of multiple top-rated insurance carriers, coverages, prices, and more.
With offices located in Alabaster, Birmingham, and Tuscaloosa, we are able to service customers all across the state. Our goal is to provide the best customer service experience. With our professional staff, we can be your liaison with the insurance carrier in the event of a claim. We work for you, not the insurance company.
We want you to have a positive experience with Bentley Insurance. Our one-on-one service approach is our top priority for all of our insurance clients. Give us a call at any of our locations or contact us through our online form, and we'll be happy to answer any of your insurance questions.
Now that we have answered some of the most vital questions you didn’t need to ask, we encourage you to look at your current policy with your insurance agent and determine where tweaks and adjustments would best serve you and your family.