What kind of military auto insurance do you really need?
Auto insurance is an expensive necessity - but too many people still purchase policies with little or no research and understanding of the coverage they really need. And a little shopping can really help: insurance premiums (the payments you make to purchase coverage) can vary by as much as 300 percent, depending on the company and products you choose.
Understanding how basic auto insurance coverages apply to your military lifestyle can mean hundreds of dollars saved on your annual auto insurance premiums, while making sure you're well protected in case of an accident, injury, or theft.
What kind of auto insurance do you need? A little knowledge goes a long way.
Auto insurance companies offer many different types of coverage. And most states require drivers to purchase a minimum amount of certain types of coverage. Here are brief descriptions of your options in auto insurance coverage:
Bodily injury liability coverage. Experts agree that this is the most important type of auto insurance coverage to carry. Bodily injury coverage pays for medical bills, lost wages, rehabilitation, treatment, and/or funeral costs for anyone injured or killed by your car. Such coverage will also pay for "pain and suffering" damages when a third party successfully sues. Consumer Reports recommends that people with a home and other assets buy coverage of at least $100,000 per person and $300,000 per accident. The biggest mistake consumers make is being underinsured on bodily injury liability coverage and overinsured on collision and comprehensive coverage.
Property-damage liability coverage. This coverage pays for the repair and replacement of vehicles and other property damaged in an accident when you or another authorized driver causes an accident. Consumer Reports recommends purchasing at least $100,000 per car.
Personal injury protection. Personal injury coverage pays medical expenses and some percentage of lost wages to you or anyone authorized to drive your car, no matter who caused the accident.
Medical payments coverage. Whether you need optional medical coverage and how much you need depend on what your health insurance coverage includes. Some experts recommend that people with excellent health insurance benefits and low co-payments purchase just the state minimum. It's important to remember that medical payments coverage also pays the medical expenses for passengers in the car who may not be so well insured, which your regular health insurance won't cover. Usually optional, this coverage pays for medical expenses over and above amounts covered by personal insurance protection, no matter who caused the accident.
Umbrella policy. Pays for losses above and beyond those covered by either auto or homeowner's insurance; this is sometimes a cost-effective way to purchase liability insurance. Some experts recommend that people with assets over $300,000 purchase a $1 million liability umbrella policy in addition to other auto insurance. (This added protection will cost you an extra $150-$300 a year in insurance fees.)
Collision coverage. Pays for damage to your car, less any deductible, no matter who is at fault. If your car is financed, your lender may require you to buy this coverage and may even require a particular deductible amount.
Comprehensive coverage. Pays for damage to or loss of your car in the event of fire, theft, or vandalism. Again, your lender may require this coverage if your car is financed. You should take the highest deductible you can afford on collision and comprehensive, especially if you have a newer car. If you have an older, modestly priced, or inexpensive car, you may want to consider dropping collision and comprehensive coverage altogether. However, you should only drop collision if you can afford to repair or replace the car in the event of an accident.
Protection from an uninsured or underinsured motorist coverage. Protects you, passengers, and anyone authorized to drive your car against bodily injury caused by an uninsured, underinsured, or hit-and-run driver. Consumer Reports suggests buying at least $100,000 per person and $300,000 per accident.
Rental reimbursement. Reimburses up to a specified amount per day for car rental or transportation costs while your car is being repaired following an accident.
Towing and labor. Covers up to a specified amount for towing and labor charges when your car breaks down, whether or not there is an accident involved.
Auto replacement. Pays for the full replacement value of the car, not its depreciated value.
