Things You “Auto Know” About Car Insurance

Insurance is a lightning rod in a storm of questions, especially when the topic is auto insurance. Why do I need it? How many kinds are there? Why is it so expensive? Because most of us drive, the topic is always relative in one way or another. So, you have questions. Here are some answers:

Q. Why do I need auto insurance?
A. First and foremost, in many states, it’s the law; you must maintain a minimum level of insurance coverage. For example, the minimum insurance requirements for the state of Missouri are:

1. Bodily injury $25,000/$50,000 limit
2. Property damage $10,000 limit
3. Uninsured motorist bodily injury $25,000/$50,000 limit

Click here to see what your state requires.

Here’s another reason—protection. That’s protection for both you and your property. What needs protecting? Glad you asked:

• Your vehicle. It’s an investment, so you need to protect it in case it’s damaged. It can be damaged during an accident or through robbery, vandalism or a natural disaster.
   
• You. Yes, you. If you’re injured in an accident, insurance may help pay your medical bills.
   
• Your assets. Things like your home, retirement funds and other investments. Insurance will help protect your assets if you’re sued for costly damages caused by an accident.

In addition, if you have an accident with an uninsured/under-insured driver, insurance can help pay for damages. This all offers you real peace of mind, knowing you’ll be covered for all these possibilities.

Q. What types of auto insurance coverages are there?
A. Here are the three major types of auto insurance coverage:

• Liability—Pays for accidental bodily injury (medical expenses, pain and suffering, lost wages) and property damage (property and auto) to OTHERS. Also pays for defense and court costs. State laws determine how much liability coverage you must carry, but you can always carry more than what the law requires.
   
• Collision—Covers damage to YOUR vehicle caused by collision with another vehicle or object.
   
• Comprehensive—Pays for loss/damages to the insured vehicle that doesn’t happen in an auto accident. This covers things such as loss by fire, wind, hail, flood, theft, vandalism, etc.

Q. Why does it seem so expensive?
A. Risk. Yep, one simple word sums it all up. According to Webster, risk is the chance of injury, damage or loss.

Each of us is a collection of risks. These risks include our sex, age, driving record, marital status, vehicle type … you get the idea. Obviously, without a crystal ball, the insurance company doesn’t know what kind of driver you are in the beginning. They don’t know the risk you represent when getting behind the wheel. Do you speed? Run red lights? All they have to go on is how those LIKE YOU drive. If you’re a young, single male driving a sports car, your rates will probably be higher because that type of driver has a proven track record of being a high risk. In the world of insurance, you are your demographic. The good news is, as you prove yourself a good driver, your insurance costs may go down.

There are many variables associated with auto insurance. That’s why you should shop for it regularly. Don’t consider price alone. Bad service can make you wish you were paying more very quickly. So see what’s out there. Bottom line, while you must have at least some coverage, be sure you’re getting the best value for your money.

If you’re in the market for auto insurance or shopping different providers, be sure to check out the competitive auto insurance options our Credit Union Insurance Agency, LLC* has to offer, including AAA and now Travelers and Progressive.

_{*Credit Union Insurance Agency, LLC, is a wholly-owned subsidiary of Vantage Credit Union.}