The Ultimate Auto Insurance Guide

Everything You Need To Know To Better Understand Auto Insurance

Table of Contents

Whether you need answers to these questions or just want an auto insurance quote, you’ve come to the right place

What Does Auto Insurance Cover?​

Bodily Injury Liability

Bodily Injury Liability coverage will pay for damages to other people’s property as a result of an accident caused by you or another covered driver.

Here are some examples of damages covered under the Bodily Injury Liability of your policy:

  • Medical Expenses
  • Disability
  • Rehabilitation
  • Law suit settlements & Legal Fees

So What Limits Do I Need?  That is the question that only you can answer with the help of you Agent.  When speaking with customers, this is a story that is often used at ALLCHOICE.

You are involved in an accident (which is your fault).  You ran a stop light and struck another car that contained three (3) people.

All three people were injured and taken to the hospital.  The driver suffered numerous injuries, including a broken arm.

The other passengers all sustained minor injuries.  It is possible that North Carolina’s minimum Bodily Injury Limits would pay for the hospital bills (lets assume they did).

However, the driver (who suffered a broken arm) just happens to be Brain Surgeon!!!  How much would a simple month away from his occupation cost in terms of lost wages?  Are those minimum liability limits still sufficient?

This is a prime example of needing proper liabiity limits and even a Personal Umbrella Insurance Policy

Property Damage Liability

Property Damage Liability will pay for damages to other people’s property as a result of an accident that is caused by you or another covered driver.  Here are some examples of damages covered under the Property Damage Liability of your policy.

  • Vehicle Repair
  • Vehicle Actual Cash Value
  • Damage to other Real Property

So What Limits Do I Need?  That is the question that can only be answered by you with the help of your agent.

Let’s continue with our same hypothetical accident from “Bodily Injury”.  The Brain Surgeon that you hit was driving a NEW Mercedes CLS550 (Sticker Price $70,000 +).  North Carolina requires you carry a minimum of $25,000 Property Damage Liability.  That leaves a very large shortfall ($70,000 – $25,000 = $45,000) between what your insurance will pay for and what you will have to pay “out of pocket”!

Are those minimum liability limits still sufficient?

Uninsured / Underinsured Motorist Liability (UM/UIM)

Uninsured Motorist coverage provides protection for YOU when an uninsured driver injures you or another covered individual (when that driver is at fault).  This coverage also provides protection for damage to YOUR property.

Underinsured Motorists coverage provides protection when an underinsured driver causes injury to a covered individual (when that driver is at fault).

An underinsured driver is defined as one whose limits of liability are less than your UIM Limits, and not enough to cover losses of the people the underinsured driver injures.

Do I Need Comprehensive And Collision Coverage Or Other Optional Coverages?

Collision Coverage

Collision means physical damage to YOUR covered vehicle caused by an impact with another vehicle or object.  Collision Coverage will pay the lesser of the cost of repair or the ACV (Actual Cash Value) of your automobile.

Collision Coverage is an optional coverage, however, you may be required to carry Collision Coverage if you have financed your vehicle.

Comprehensive Coverage (Other Than Collision)

Comprehensive Coverage pays the cost of repair of ACV of your automobile when damage is caused to your covered vehicle by something “other than collision”.  Here are some examples:

  • Fire
  • Theft or Larceny
  • Contact with an animal

Comprehensive Coverage is an optional coverage, however, you may be required to carry Comprehensive Coverage if you have financed your vehicle

Towing And Labor

Towing & Labor Coverage pays for towing and labor costs each time your covered automobile or any non-owned automobile is disabled or the keys are lost, broken or accidentally locked in the car.

Extended Transportation (Rental Reimbursement)

This coverage will pay transportation expenses incurred by you or loss of use expenses for a non-owned vehicle for which you become legally responsible.

Medical Payments

Medical Payments Coverage pays for reasonable expenses (medical or funeral) due to an automobile accident.  Who is covered?

  • You or any family member while occupying any automobile, or as a pedestrian when struck by a motor vehicle
  • Any other person while occupying your covered automobile or any vehicle driven by you or a family member

Medical Payments Coverage is an optional coverage.

How Much Does Car Insurance Cost?

Car Insurance Premiums vary from state to state, city to city, and person to person!

Here is a look at some of the factors that influence your insurance premium.

  • Driving Experience

    • Insurance Carriers can not adversely rate drivers based upon your AGE. However, they can charge different premiums based upon the years of driving experience a person has
  • Driving Record

    • Someone who has no tickets or accidents on their driving record will receive a better rating than someone who has tickets or accidents.
    • In some states, the Department Of Insurance allows insurance carriers to issue Surcharges to a policy (called Insurance Points) for tickets and accidents.
  • Type Of Vehicle

    • Liability Rate Factors: The type of vehicle you drive helps determine your liability rates. The safer the vehicles, the better rate.
    • Comprehensive & Collision Rate Factors
      • Average Repair Cost (some vehicles cost more to repair than others)
      • Value Of Vehicle
  • Location

    • Rural vs. City: More accidents occur (statistically) in cities vs more rural areas, therefore the rates ina more urban area will be higher than that of their more rural neighbors

What Discounts Can Lower My Insurance Premium?

NOTE Discounts are often just talking points for Insurance Carriers.  Different Carriers offer different discounts.

Discounts are reductions off of the carriers Base Insurance Rates for a particular risk. Therefore, a carrier could offer NO DISCOUNTS and still have lower a premium than another carrier that offers 100 Discounts if the BASE RATE is lower to start with.

However, in order to make sure you qualify for the very best insurance rate, here are a few discounts to consider:

  • Multi-Policy Discount

    • Insurance Carriers know that, statistically, they keep clients longer if they have more than one policy for a client.  Therefore, the carrier can charge a lesser rate.
    • When Possible, look to combine your Home Insurance & Auto Insurance with the same carrier.
  • Multi-Car Discount

    • The most cars you have on a policy, the lower the per vehicle cost becomes
  • Claims Free Discount

    • The better a person’s driving record is, the better the rate that driver will receive
  • Advance Quote Discount

    • Insurance Carriers have found that people who plan in advance to change auto insurance carriers are more responsible, and tend to have better claims history.  Most carriers will provide a discount to someone if they start looking for insurance quotes more than 7 days in advance of their renewal date
  • Higher Limits Discount

    • This is a newer discount, but people who seek quotes have a certain liablity limit or higher than a certain limit…they will receive a better rate

Do I Need Car Insurance?

While every state has different requirements, if you live in North Carolina, Auto Insurance is something that most individual residents of must have.

The problem that many NC Residents face is a lack of understanding of what coverages, and what coverages are needed.  The North Carolina Financial Responsibility Laws require that Automobile Liability coverage be maintained.  The minimum coverage requirements are as follows:

  • $30,000 Bodily Injury Per Person / $60,000 Bodily Injury Per Accident
  • $25,000 for Property Damage

Additionally, North Carolina now requires that all licensed drivers carry Uninsured/Underinsured Motorist Coverage at least equal to the highest liability limit on any one vehicle insured under the policy. Now that you know what the law requires…let’s take a better look at the actual coverages that are available.