Necessary Evil
“I can’t even understand my policy I just know I need to show an insurance card whenever I get pulled over”, says one of my newly licensed clients who’s excited about driving but not excited about choosing her insurance coverages. Auto insurance isn’t the most exciting subject but it’s something you should understand, especially if you’re a policyowner. I know, I know who really wants to pay for auto insurance I mean you pay all year long for protection IF an accident happens. And then at the end of the year when its time to renew your premium goes up even though there were no accidents! It’s all a hoax smh.
But in reality Insurance is very necessary and can really make a difference in an emergency. Insurance is a risk at the end of the day and people come together to pool their money (premiums) to pay for the losses of the few (claims). Universe forbid you are involved in an accident and you don’t have auto insurance. Now the other party is suing you directly for all your assets including homes, cars, boats, you name it. With auto insurance you wouldn’t have to worry about that.
Your liability limit is the maximum limit your insurance company would pay for any lawsuit brought against you in an auto accident for bodily injury or property damage. The minimum limit you can have in New Jersey is $25/$50K. You may want to check your policy’s liability limit and see where you stand. This coverage is required to have per most state laws.
If you are financing or leasing a vehicle you must maintain full coverage on your policy. Full coverage consists of Comprehensive and Collision. Comp refers to any accident other than collision. Such as fire, theft, flood, or if you hit an animal like a deer. Collision refers to any accident that you have with another vehicle. Having full coverage will allow you to get the physical damage on your vehicle fixed by your insurance company after you pay a deductible first. The standard deductibles are $500 or $750, the higher your deductible is the cheaper your premium will be.
Uninsured and underinsured provides coverage if you are hit by someone who has no insurance or they have less coverage than you do. A hit and run would not apply since there is no insurance information to verify coverage and person involved.
Policies automatically include medical coverage with a standard limit of $250K, which pays for medical bills related to a car accident. NJ is a no-fault state meaning that regardless of who’s fault it is, you can be compensated for medical expenses. Some insurance companies allow you to list your own health insurance, such as Aetna or United Health, as primary PIP meaning they would pay out first for any medical expenses. Changing your PIP will reduce your premium, it’s worth calling your health insurance company to see if they allow this. If you maintain state insurance such as Medicaid, you would not have the option to change PIP therefore the auto insurance company will be listed at primary PIP.
See that wasn’t so bad now, was it? I hope that after reading this it gives you some insight on your auto policy and maybe even help determine if you need more or less coverage. If you are interested in gaining a more in depth understanding of your policies, please schedule a 30-min consultation with yours truly. Now go on and look at your auto policy, I know you’re dying to!
