Auto Insurance, Explained

Auto Insurance, Explained. 

Auto Insurance is something we are all required to have to drive our vehicles legally. But what exactly is required, and what does that cover? Today we want to talk to you about the different levels of coverage you can purchase to protect yourself, your passengers, and others on the road. Most states require a basic liability policy, but this does not cover your vehicle in the event of an accident.

So what is liability insurance? Liability insurance protects other people and their property in an accident. In Arkansas, the state minimums are 25/50/25. This means they will pay up to $25,000 per person, with a limit of $50,000 per accident. The last number is for property damage. In this case, it will pay up to $25,000 in property damage to replace or repair the other vehicles involved. We recommend having higher than the state minimums, as several vehicles on the road would cost more than $25,000 to replace, especially if more than one vehicle is damaged. Medical expenses can also add up quickly, and not having adequate coverage can leave you liable for lawsuits. Liability insurance does not protect you or your vehicle in an accident, which will leave you with the cost of your own medical expenses and damage to your vehicle. Some people are able to “self-insure”, so they only carry liability insurance and are comfortable replacing their current vehicle out of pocket if something were to happen.

If you ask your insurance agent for full coverage, this will help protect you and your vehicle in the case of an accident. Full coverage insurance would include Collision and Comprehensive coverage. Comprehensive includes anything other than a collision, such as theft, vandalism, glass/windshield damage, and weather/acts of nature. You choose your deductible, which can range from $100 to $1,000 depending on the carrier. Full coverage is typically required if your vehicle is financed.

Insurance coverage does not stop with liability or full coverage, there are also a few options for you to consider to protect you and your passengers such as Medical Payments Coverage, Personal Injury Protection (PIP), and Uninsured/Underinsured Motorist Coverage.

The Medical Payments option is beneficial to you and the passengers of your vehicle who are injured in an auto accident. Regardless of who is at fault, this option will pay a specified dollar amount for medical expenses.

 Personal Injury Protection is required in some states. This option can help ease the financial burden of funeral expenses, medical or rehab services, and can even help if you lose income from being injured in an accident.

 If someone without insurance is at fault in an accident, having Uninsured Motorist protection will help cover your medical expenses from an injury, and will help repair or replace your vehicle. Underinsured Motorist protection will come into play if someone does have insurance, but does not have enough coverage for what is needed. For instance, if they have state minimum coverage in Arkansas and your vehicle will cost $40,000 to replace, their insurance will only cover up to $25,000 of that. Uninsured and Underinsured Motorist coverage is highly recommended by most Insurance Agents, to ensure you are protected against the unexpected.

 If you have further questions or would like to learn more, our agents are happy to help you understand what policy is best for you!