Auto Insurance

What is auto insurance?
Auto insurance protects you against financial loss if you have an accident. It is a contract between you and the insurance company. You agree to pay the premium and the insurance company agrees to pay your losses as defined in your policy.

Auto insurance provides property, liability and medical coverage:

• Property coverage pays for damage to or theft of your car.
• Liability coverage pays for your legal responsibility to others for bodily injury or property damage.
• Medical coverage pays for the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses.

An auto insurance policy is comprised of six different kinds of coverage. Most states require you to buy some, but not all, of these coverages. If you're financing a car, your lender may also have requirements.

Most auto policies are for six months or a year. Your insurance company should notify you by mail when it's time to renew the policy and to pay your premium.

Why do you need auto insurance?
It's really all about protecting yourself financially.

• If you're in an accident or your car is stolen, it costs money, often a lot of money, to fix or replace it.
• If you or any passengers are injured in an accident, medical costs can be extremely expensive.
• If you or your car is responsible for damage or injury to others, you may be sued for much more than you're worth.
• Not only is having insurance a prudent financial decision, many states require you to have at least some coverage.

Questions to ask your agent
Your Independent Agent is an advocate for finding auto insurance that meets your specific needs. Here are a few things to consider as you prepare for the discussion:

• How much can you afford to pay if you get in an accident? (To keep premiums low you may want to have a higher deductible and be willing to pay more for repairs.)
• What is the insurance company's level of service and ability to pay claims?
• What discounts are available? (Ask about good driver, multiple policy and student discounts.)
• What's the procedure for filing and settling a claim? (Ask who to call and what happens after you file a claim.)

Auto Insurance Quote Q&A

• Liability: Pays for injuries to others and damage to their property if you cause an accident
• Personal injury protection (PIP), also known as “no-fault” (not required in most states): Ensures payment for your and your passengers’ medical bills by your own insurer even if the accident is not your fault, and may also pay for lost wages, funeral expenses and other losses
• Medical payments: Pays your and your passengers’ medical bills, up to a
  
• predetermined limit, regardless of who was at fault in the accident
  
• Collision: Pays for damage to your car resulting from an accident
  
• Comprehensive: Pays for the theft of your car or damage to your car caused by something other than an accident
• Uninsured and underinsured motorist: Pays for damages resulting from an accident caused by an uninsured, underinsured or hit-and-run driver (takes the place of liability insurance that the other driver should have purchased but didn’t)
• Commercial (business) auto insurance: Covers losses incurred in the course of conducting your business

What is the difference between collision and comprehensive?

What is the difference between personal injury protection (PIP) and medical payments coverage? 

These coverages both pay for your and your passengers’ medical expenses regardless of who was at fault. But PIP typically provides additional coverage that pays for things like lost wages, funeral expenses and other losses. PIP generally also offers higher coverage limits than medical payments coverage does, but can have a deductible associated with it. Neither type of coverage pays for vehicle damage—that would be covered by the party that caused the accident or by your own collision coverage. PIP is not available in all states; in some states it is required.

Some experts advise forgoing medical payments coverage if you have good health insurance that would cover your medical bills. If PIP is required in your state, you must purchase it. If it’s optional, and you have good health insurance, you would have to decide if the other potential benefits of the coverage (funeral expenses, lost wages, etc.) are worth the cost.

What is “accident forgiveness”?

Some insurance companies sell “accident forgiveness,” an add-on to your policy that keeps your rates from going up after your first at-fault accident. There might be a limit on the claim amount that would be forgiven. In other words, if the accident you caused were major, with a large payout from the insurance company, it might not be overlooked when the next premium period rolled around. Before agreeing to the coverage, read the fine print—it may not be worth the extra cost. “Accident forgiveness” might not be available to you unless you have a clean driving record and no claims and/or have been a policyholder with the insurance company for a certain number of years. (Some companies offer “accident forgiveness” at no charge to long-term policyholders with a clean record.)

What is a deductible?

A deductible applies to your collision and comprehensive coverages, the two types of insurance that pay for damage to your own vehicle, but not to liability coverage. The deductible is the amount of the repair or replacement cost you have to pay out of your own pocket before the insurance kicks in to pay the rest. For example, if you have a $1,000 deductible and you have $10,000 damage to your car, the insurance company will pay $9,000 ($10,000 minus $1,000). (There also may be a deductible on your PIP coverage, if you have it.) When you purchase your policy, you must choose the amount of your deductible. This can be different for each of the coverage types. The higher the deductible, the lower your premiums will be. It is generally better to choose a higher deductible that you pay only if and when the need arises than to continuously pay higher premiums and perhaps never have a claim. You would also want to avoid a history of multiple small claims, even if your deductible were low, as this would increase your rates. Still, you should make sure the deductible you choose is low enough that you could come up with that out-of-pocket amount if you needed to. Set aside your deductible in an emergency savings account.

If you are looking for an affordable Auto Insurance Quote, look no further than Baja Insurance! Contact us today to get started protecting your most precious assets!