According to the Insurance Information Institute, in 2015, the average auto liability claim for bodily injury was over $17,000. This represents injuries to other people as opposed to your own injuries. About 5 percent of bodily injury claims top $100,000. Whether $17,000 or over $100,000 or somewhere in between, most of us don’t have that kind of loose change under the couch cushions.
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Do you have the right auto insurance coverage to protect your assets?
- Main types of auto insurance coverage
- What else is not covered by auto insurance?
- Spotlight on auto insurance medical coverage
- What affects auto insurance rates?
- Online auto insurance quoting tools and the value of local agents
- What to look for in the best car insurance policy
- Best auto insurance company (overall): Amica
- Best for customer service (Esurance)
- Best for affordability (Geico)
- Best for veterans (USAA)
- Best for young drivers (Liberty Mutual)
- Final thoughts
Main types of auto insurance coverage
Insurance is governed at the state level, so while many basic coverages will be similar, there are some different approaches on coverage options, depending on the state in which you reside. Most of these differences are in the liability coverage options and in the medical coverage options. First, let’s discuss the core coverage areas.
|Type||Description||Required by state*||Required by lenders*||What it covers||What it doesn’t cover||Deductible information|
|Full||Combination of collision, comprehensive, and liability coverage||No||Yes||Everything covered by collision, comprehensive and liability||Car rental, gap insurance, Medical payments coverage, uninsured motorist||Depends on your combination of insurance|
|Collision||Protects your own property in the case of a collision||No||Yes||Repairs caused by an impact with another car and
repairs due to a collisions with a stationary object
|Damage to any other vehicle, injured pets, Medical payments coverage, other damages not due to a collision||Reimburses actual cash value (ACV) for your car minus your chosen deductible|
|Comprehensive||Covers non-accident related repairs||No||Yes||Damages caused by broken glass, falling objects, fires, impacts with animals, theft, and vandalism||Damage to other people’s personal property or expenses from their bodily harm||N/A|
|Liability||Covers damage to another person’s property and injuries||Yes||Yes||Varies, but generally costs incurred by another person’s bodily injury and their||Your own damage to your personal property or your own bodily harm||Coverage limits vary per person covered and their coverage limits|
|Medical Coverage||Two main options, depending on state: MedPay and Personal Injury Protection (PIP)||Yes||N/A||May cover a combination of funeral, medical, lost wages, and dental care expenses||Restrictions vary widely per policy||Health insurance will be used first, this is used as a secondary payment|
|Uninsured or Underinsured Motorist Bodily Injury & Property Damage Coverage||Protects you from uninsured or underinsured drivers||In some states||In some states||You and your passenger(s)’s medical expenses, lost wages, and pain and suffering||N/A||May or may not have a deductible, depending on your policy|
*Varies by state and provider. Check your state laws and insurance provider’s requirements for specific information.
What else is not covered by auto insurance?
Even the best car insurance policy won’t cover everything. Some insurers offer options to fill some of the gaps. Other gaps will likely never be covered.
- Illegal or criminal activity: You’ll find some exclusions in your policy which explain that damage caused while engaged in illegal or criminal acts will not be covered.
- Rental cars: The coverages you have on your policy will extend to rental cars, but usually not if used for business, and usually not longer than 30 days. Additionally, if the rental car is damaged, you will not be covered for “loss of use” when the rental company can’t rent the car to someone else because it is being repaired, or for “diminution”, which is the loss of value for the rental car even after it is repaired. Also, be aware that if you don’t have collision or comprehensive coverage on your own policy, the rental car will not have those coverages either, unless you purchase separate insurance from the rental car agency.
- Rideshare or commercial use: Your auto policy covers you when you’re not “on the job” with a rideshare company, but coverage becomes fuzzy if you are “available” to take a customer or “in transit” to pick up a customer, or even if you just dropped one off. Once you have a passenger, the rideshare company’s insurance takes over. The basic premise is that a personal auto insurance policy is for personal use of your vehicle.
- Your personal property: Personal property (laptops, phones, etc.) damaged in an accident or stolen from your automobile won’t be covered by your auto insurance policy. However, if you have a homeowners or renters insurance policy, you may be able to place a claim with that policy, subject to your deductible.
- Deliberate damage: If you set fire to your car, the insurance company won’t pay to repair or replace your car. However, if someone else does those things to your car as an act of vandalism, you are covered if you have comprehensive coverage, subject to your deductible.
- Riots, civil commotion, war, or acts of terrorism: These things may seem far-fetched, and you’re much more likely to have a common fender-bender, but your insurance policy probably excludes all of these risks – if any of them do happen.
Spotlight on auto insurance medical coverage
As mentioned earlier, the medical coverage for your auto insurance policy is an area that’s important to discuss. There are some potential pitfalls if your policy isn’t structured with your finances in mind.
For example, if you live in a state that uses Personal Injury Protection to provide medical coverage on your auto insurance policy, you’ll have choices of coverage as low as $15,000 in some states. A lower amount of PIP coverage will help to keep premiums lower. An agent or producer might also suggest a higher deductible for your PIP, also to keep costs down.
Deductibles for PIP can go as high as $2500. This combination of a high deductible and lower coverage amount can keep costs low and everything is wonderful in the world – until you get injured by an automobile.
In the example above, here’s what happens if you are injured:
You’ll have to pay $2,500 for your deductible. Your PIP coverage will cover up to $15,000 in medical expenses. However, in many cases, there is a copay of 20 percent up to the first $5,000 (after your deductible).
|PIP Coverage||Copay Amount|
|$5,000 – $2,500||$2,500 subject to Copay|
|$2,500 x 20%||$500 Copay|
Now your out of pocket expense is up to $3,000.
After your chosen $15,000 limit is reached, your coverage rolls over to your existing health insurance if you have health insurance. You’ll likely pay another deductible (and Copay) with your health insurance company. Let’s assume that deductible is only $500.
Now your out of pocket expense is up to $3,500.
Depending on your individual finances, the savings available through lower coverage limits and higher deductibles may be tempting, but also may not be worth the financial risk. Ask your agent for quotes with different coverage limits, if available, and different deductibles so you can make a better-informed decision.
What affects auto insurance rates?
Insurance is the transfer of risk from an individual to a pool of individuals. To make the math work, insurance companies need to understand the risk you represent relative to the pool.
- Credit: Insurance companies have found a correlation between credit ratings and the risk of a claim – for all major insurance types.
- Driving history: Including tickets, accidents, DUI incidents, and reckless or careless driving violations. It’s common for insurers to weigh accidents in the past 5 years and tickets or violations in the past 3 years.
- Location: Where you live is a bigger deal than you might think. Urban areas have more cars on the roads to bump into – and more distractions.
- Type of car: The repair or replacement costs may be higher with certain makes or models. Some types of cars are more likely to be stolen or scrapped for parts. Also, the safety features or crash ratings of a particular type of car affect rates.
- Miles driven: Every mile driven is a mile in which you could be involved in an accident. Some insurers offer a discount for low mileage drivers. If your mileage use is well above the average of about 15,000 miles per year, some insurers will charge more.
- Experience: They say experience is the best teacher, and if we don’t have much experience driving, insurance companies may charge more. Some insurers won’t even write a policy for a driver with less than three years of driving experience.
- Gender: On average, males will pay more than females, especially if they’re younger.
- Age: Younger drivers will pay more than older drivers. Different insurers begin to give price breaks at different ages. Some begin at age 21. Others begin at age 25, or even 30. Some insurers will also charge more for drivers over the age of 70.
- Length of coverage and limits: If you have had state minimum coverage limits or have gaps in your coverage history, or have been with your current insurer for a short period, this can cost you in form of higher premiums.
- Home ownership: Insurance companies generally give lower rates to homeowners because they have found a correlation between homeownership and reduced risk. You can also bundle your homeowners insurance.
- Recent claim trends: It’s not unusual for an insurer to raise rates in a state following an event create a surge in claims, like a large storm.
- Geographic location: In some cases, these differences can be due to state rules that mandate certain types or levels of coverage. In other cases, an area can be more expensive because the roads are more heavily congested.Weather events can also be another driving force that affects rates by region. Hail, wind, and storms can cause damage to cars, cause accidents, and create surges in claims.
Most expensive states for auto insurance:
- Rhode Island
Least expensive states for auto insurance:
- North Carolina
It’s not just the state you live in that can affect rates, your zip code does, too. If you move to a new location, even if it’s nearby, your rates could change based on the overall risk in that area. The good news is: rates might go down as well.
Online auto insurance quoting tools and the value of local agents
Every major insurer has an online quote tool that allows shoppers or customers to fill out a form to get a quote online. Often, these forms have fine-print disclaimers which explain that the quote may not be accurate and that actual rates may vary after underwriting review of your application.
Online quoting tools have their place – as a tool. Consumers can compare prices in a general way, eliminating companies with high quotes and who haven’t shown sufficient value to justify the higher price. Because of the complexity of the policy for certain insurance types, it’s recommended that you speak with an agent.
Local insurance agents will always have their place in the insurance market, even as technology improves the overall shopping experience by providing more information for consumers before they purchase a policy. Of particular value, a local agent looks at your individual needs as a whole, and can gently guide you away from a coverage selection which can hurt you. An online form won’t say a word if you make it coverage selection which may not be in your best interest.
But, speaking with an agent can be more time consuming than getting online quotes. Utilizing online quote tools allows consumers to narrow their choices and then have those conversations with agents from the right companies.
What to look for in the best car insurance policy
There’s a lot that goes into choosing the best car insurance. And, keep in mind that the best policy Our picks are based on the following criteria:
1. Customer service/claims satisfactions
We buy insurae because of the possibility of a claim. Until there is a claim, there really isn’t much value provided by an insurer; they just sit back and collect the premiums, while handling claims for others. When or if we do have a claim, companies need to illustrate their value.
2. Consumer data: broad satisfaction, price, and customer service
We also looked at consumer data such as JD Power’s surveys which measured broad satisfaction in a number of areas ranging from price to customer service.
Affordability, often tied to available discounts, was a consideration – but not the main focus. A company that is inexpensive but which doesn’t provide adequate customer service or claims service doesn’t provide the level of value we seek in our top picks.
We also looked for extras, features that make a policy stand out among fairly standard options from competitors, like the ability to earn a dividend or to earn discounts for loyalty or for good driving.
Because a large number of consumers often have more than one type of insurance, we also looked at bundling discounts and the quality of the other policy type most likely to be bundled with auto: home insurance.
5. Nationwide availability
Nationwide availability was also considered. There are some very good regional insurers, but we placed our focus on insurers that could meet the needs of most people, regardless of location.
Best auto insurance company (overall): Amica
Amica earns our top pick for auto insurance, and for many of the same reasons.
Amica is a mutual company, meaning it is owned by its policyholders. This structure enables the company to pay dividends on qualified policies if there is a surplus after expenses have been paid. Dividends are not guaranteed, but the company has paid dividends for the past 100 years and dividends average about 20 percent of premiums for qualified policies.
How Amica got the top spot
Customer service, including claims service, with Amica, is excellent, proving the company’s ongoing commitment to its customers, which are also its owners.
While not always the lowest priced insurer, Amica remains competitive, leaving its customers little reason to shop around because they find value with this insurer.
Amica’s Platinum Choice Auto policy enables customers to earn points by renewing policies and by good driving which can then be used to waive deductibles or to reduce premiums. It’s money in the bank – earned simply by staying with a company that already offers great value for consumers.
Where Amica falls short
Where Amica falls short of some competitors is in local agent presence. There are very few physical locations. Customers of Amica should expect to do business online or by phone with their highly-trained and knowledgeable agents.
Best for customer service (Esurance)
If you wreck your car, the last thing you want to deal with is terrible customer service. Esurance – an Allstate company – shines in this regard.
How Esurance got the top spot
You can engage with a customer service representative using several different channels. Their direct line is open from 6 am -12 am CST every day a week, which is almost 24/7 live help. They also promise to respond to email inquiries within 24 hours and encourage customers to reach out via Facebook and Twitter.
Where Esurance falls short
Esurance isn’t always the most affordable option and is mostly available on the west coast of the United States.
Best for affordability (Geico)
Geico takes the spot as the most affordable car insurance company.
How Geico got the top spot
If you’re on a budget or have a family, you’ll find that Geico is priced pretty well compared to its competitors. As you know, the numbers can change drastically from one customer to the next, but we found a pattern in lower rates for all.
Where Geico falls short
You’re paying less, but you also get a little less in the customer service department. Most call and customer service were brought to a centralized location, so don’t expect in-person or ultra-personal customer support.
Best for veterans (USAA)
USAA is an outstanding auto insurance choice if you qualify for membership. The insurer caters to military personnel, veterans, their families, and the family members of existing USAA members. While its family inclusions open availability to a larger number of people, USAA doesn’t yet service the broad population.
Why we like USAA
Top rated customer service and claim service combined with thoughtful policy features make this insurer worth considering if you are among those who qualify for membership.
In our quote tests, we were able to save over $100 per month as quoted by USAA when compared to another national insurer. The cost savings was underscored by overall better policy options with USAA, which included Accident Forgiveness, Car Replacement Assistance, and Rideshare Gap Protection.
Where USAA falls short
For the general consumer, USAA may not be an option. As a consequence, it is limiting as an auto insurance provider and ultimately is best suited for only those that can qualify for membership.
Best for young drivers (Liberty Mutual)
Unfortunately, new drivers will always pay more for their insurance. But, you can obtain discounts from certain auto insurance companies – like with Liberty Mutual.
Why we like Liberty Mutual
Liberty Mutual gives teens discounts for good grades (B average or higher) and for completing a Driver Training Program if they’re under 21 years old. The discounts don’t stop there, though.
They also provide a Teen Driving Contract. It’s optional for policyholders but shows they’re committed to safety. If you’re not familiar with this contract, it helps you facilitate a conversation with your teen about safe driving habits. This means no phone use while driving, how to use navigation without being distracted, driving only when alert, and how to set a good example as a parent.
Liberty Mutual gives discounts for special safety features – like anti-lock brakes and anti-theft devices. You also qualify for discounts if your teen is living more than 100 miles away at school and only occasionally drives your car. This will only bring the rate down on the parents’ own car, however.
Where Liberty Mutual falls short
While the internet certainly makes it easier to communicate with the company, you probably won’t find a local office near you – they centralized their national call centers. And, they scored at the very bottom of the pack for JD Power’s 2017 Car Insurance study.
Many companies treat insurance as a commodity, commonly available and with little difference in features or options. Amica and our Special Mention pick, USAA, both recognize that customers are buying service, not just insurance.
Insurance rates are individualized, so it’s important for consumers to shop around. One company might treat you better than another in regard to price. But also consider service and policy options, and have a conversation with your agent about coverage types and limits. An insurance policy sits there silently waiting for a claim. When a claim happens, we want to know that our policy is structured properly to protect us financially and that the service we’ve paid for will be there when we need it most.