Make sure auto coverage is right

A serious accident, inadequate liability could prove costly, putting you on the hook for thousands of dollars
2013-03-14T00:00:00Z 2014-07-08T16:50:13Z Make sure auto coverage is rightValerie Vinyard Special To The Arizona Daily Star Arizona Daily Star

Don't go on autopilot when choosing car insurance.

Even though auto insurance is required by law for motorists, the Arizona Insurance Council reports that 18 percent to 20 percent of drivers are uninsured at any one time in the state. That's why getting adequate coverage is so important.

According to Keith Hinderberger, an insurance sales agent for AAA Arizona on North Oracle Road, many people don't know what their actual coverage includes.

Some people think that they need only liability, which is technically true, but it could prove disastrous for an Arizona motorist. Arizona's minimums are $15,000 bodily injury liability for one person, $30,000 for two or more people and $10,000 for property damage liability.

However, people who carry only liability coverage in Arizona and cause an accident could potentially lose their home, other vehicles or anything else of value if they don't have enough coverage if they are involved in a lawsuit.

"They have no idea that carrying a higher liability is to protect themselves," Hinderberger said. "There's a misconception that it's going to cost you more, but it really doesn't."

A big part of an insurance policy includes coverage for underinsured and uninsured motorists. There is no minimum requirement for this part of an Arizona motorist's policy. Some people opt for low coverage, such as $15,000 per person.

That sounds like a lot, but if you've ever been in a car accident, you'll know that even a seemingly small fender-bender can equate to hundreds or even thousands of dollars after the costs are tallied for damage, the use of a rental car and time off work. And if there are medical costs, that's another huge expense.

You should match your liability limits to under- and uninsured motorists in order to protect your assets. That coverage kicks in when you're the victim of a hit-and-run accident, the other driver doesn't have insurance or the other driver doesn't have enough coverage.

The Insurance Information Institute warns that state minimums do not provide sufficient coverage in serious car accidents. A good rule of thumb is to carry liability coverage that is no less than 100/300/50. That way, you'll be able to provide $100,000 worth of coverage to one individual, $300,000 worth of injury coverage to all passengers and $50,000 for damage to property.

Generally, the greater your assets, the more liability coverage you need because you stand to lose more if you are sued.

For newer cars, you should have a deductible on both collision and comprehensive that is the maximum amount that you can afford to pay out-of-pocket for repairs. The higher the deductible, the lower the premium. The average policy carries a $500 deductible for both collision and comprehensive claims, although deductibles can range from $100 to $1,000.

Of course, if you have an older car, and the cost of repairing or replacing your car is likely more than its value, then experts advise waiving both collision and comprehensive coverage.

Many things factor into how insurance rates are calculated: Where you live; what you're driving; age and gender; how many tickets or accidents you've had; and more recently, your credit score. Also, the deductible and policy limits you choose will affect rates. Teens face higher rates due to their statistically higher likelihood of engaging in risky behavior.

Yet discounts can abound for motorists. A high credit score could result in a discount, as can being married; insuring multiple vehicles; and bundling your policy with your homeowner's insurance. Even taking a driving course can result in rate reductions.

Figuring out the best coverage can be confusing.

"Ask questions of your agent: Is this enough? That's what we're there for," Hinderberger said.

Terms to know

• Deductible: The amount you will have to pay if you file a claim.

• Liability coverage: Covers your liabilities incurred while operating the insured vehicle, up to the policy limits. The limits are denoted by a series of three numbers, such as 100/300/50 to represent hundreds of thousands of dollars (thus, 100 means $100,000). At-fault motorists remain personally liable for victims' costs in excess of their policy limits.

• Collision coverage: Covers damage to your vehicle sustained in a collision with another vehicle, object or uninsured motorist. Animals typically are excluded.

• Comprehensive coverage: Covers most other sources of damage to your vehicle, such as weather events, animal collisions and deliberate damage or theft.

• Uninsured/underinsured motorist coverage: Covers bodily injury caused by someone who is driving without insurance or who maxes out his liability policy limits.

Valerie Vinyard is a public affairs specialist for AAA Arizona. Contact her at 258-0518 or at vvinyard@arizona.aaa.com

Copyright 2014 Arizona Daily Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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