Auto insurance basics

FAQs: Auto insurance basics

Why do I need auto insurance?

In nearly all 50 states, auto insurance is required by law. It provides protection for motorists and is part of your total financial planning. It protects you from unexpected expenses which can be very costly.

Here are a few of the ways auto insurance can contribute to your overall financial wellbeing:

  • Protects the investment in your car – one of your biggest investments
  • Pays for medical bills after an accident
  • Shields you from damages that may result from accident-related lawsuits and thereby guard the assets that you’ve worked hard to collect
  • Protects you from motorists who are uninsured
  • Pays for damage repairs due to theft, vandalism, or natural disasters

What is liability coverage?

Liability coverage can help you pay for loss if you’re the person held accountable for damages in an accident. Most states require you to have it as a part of your auto insurance policy.

There are two main types of liability coverage in your auto insurance policy: bodily injury and property damage coverage. Bodily injury coverage helps pay for an injured person’s medical expenses and lost wages if you’re at fault in a car accident. Property damage coverage helps pay for damages to another person’s property (such as a car, fence, home) if you’re at fault in an accident. Both types of coverage can also help protect you in the event of a related lawsuit.

What is bodily injury coverage?

Bodily injury coverage is a type of liability coverage. Bodily injury coverage helps you pay for an injured person’s medical expenses and lost wages if you’re at fault in a car accident. Bodily injury coverage can also help protect you in the event of a related lawsuit.

In Virginia, you are required to have a minimum amount of bodily injury liability coverage of 25/50/20. In other words, you must carry coverage minimums of $25,000 per person, $50,000 per accident, and $20,000 for property damage. In Maryland, you are required to have a minimum amount of bodily injury liability coverage of 30/60/15. In other words, you must carry coverage minimums of $30,000 per person, $60,000 per accident, and $15,000 for property damage.

However, these minimum limits are typically not enough to protect you and your household should you get into a serious accident. We urge customers to increase their limits with a small monthly payment so they lessen the risk of a larger payout later.

What is property damage coverage?

Property damage coverage is a type of liability coverage. Property damage coverage helps you pay for damages to another individual’s property if you’re at fault in an accident. This form of auto insurance coverage can also help protect you in the event of a related lawsuit.

Most states require you to have property damage coverage as a part of your auto insurance policy. In Virginia, you are required to have a minimum amount of property damage coverage of $20,000. In Maryland, you are required to have a minimum amount of property damage coverage of $15,000. However, we suggest you don’t skimp on your coverage in this area—should you get into a serious accident it could cost you thousands of dollars out of pocket to replace or repair the other person’s car.

Consider this – the average new car costs over $25,000. If you’re in a serious accident that damages a new car, you may be responsible for the full replacement value. If your vehicle were to hit a building, the cost to repair structural damage could easily top $65,000.

When buying a policy, consider purchasing the highest limits you can comfortably afford to obtain maximum insurance protection. Property damage coverage provides a lot of protection and is relatively inexpensive. It only costs a few dollars a month more to purchase a higher level of coverage, and it could save you thousands if you ever end up in a serious accident.

What is uninsured motorist coverage?

Driving without insurance is illegal in most states. Unfortunately, that doesn’t always stop drivers from doing so. That’s why uninsured/underinsured motorist coverage was created. Although the requirements differ by state, uninsured/underinsured motorist coverage pays for medical expenses, lost wages, property damage and other general damages when policyholders or passengers are injured in an accident caused by a driver who has no car insurance coverage or insufficient car insurance coverage.

If you are involved in an accident with an uninsured motorist, Elephant will cover costs up to the limits on your policy. Uninsured motorist coverage may also pay for injuries sustained in hit-and-run accidents.

If you are involved in an accident with a driver who is underinsured, Elephant will typically cover the difference between your coverage and the other driver’s bodily injury coverage, up to the limits on your policy.

What is medical payments coverage?

Medical payments coverage pays medical bills and/or funeral costs if a covered driver and/or passengers are injured or killed while in an insured vehicle. This coverage applies regardless of who’s at fault in an accident.

You may not need medical payments coverage if you and your passengers are fully covered by a health plan. However, if your health plan requires you to pay a deductible, medical payments coverage may help pay it. This coverage can also help pay for items which may not be covered by your health plan, such as dental treatment, professional nursing services, prostheses, and funeral services.

What is collision coverage?

Collision coverage helps pay for damage to your own car when it is hit by another vehicle, object, or rolls over. It pays for the cost to fix your vehicle less the deductible amount you choose. Collision coverage is not required in Virginia or Maryland, but if you secured a loan or a lease to finance the vehicle, then the lien holder may require it.

When you buy collision coverage, you’ll be asked to choose a deductible. If you choose a deductible of $500, and you file a claim, you’ll be required to pay only up to $500 out of your own pocket for your car’s repairs or replacements. However, the higher deductible you choose, the lower your auto insurance premium will be. When choosing your deductible, think about which you’d prefer—a low insurance premium accompanied by a higher out-of-pocket amount in the event of an accident, or a higher premium to ensure lower out-of-pocket expenses toward an accident.

What is comprehensive coverage?

There are many ways for your car to be damaged other than a collision. Comprehensive coverage helps pay for damage resulting from falling objects, fire, certain natural disasters, theft, and vandalism.

When you buy comprehensive coverage, you’ll be asked to choose a deductible. If you choose a deductible of $500, and you file a claim, you’ll be required to pay only up to $500 out of your own pocket for your car’s repairs or replacements. However, the higher deductible you choose the lower your auto insurance premium will be. When choosing your deductible, think about which you’d prefer—a low insurance premium accompanied by a higher out-of-pocket amount in the event of an accident, or a higher premium to ensure lower out-of-pocket expenses toward an accident.

What additional coverages can I get?

In addition to the basic coverages, Elephant Insurance allows you to purchase these additional coverages.

Medical payments

Covers medical expenses to you and your passengers injured in an accident. This coverage applies, regardless of who is at fault.

Collision

Covers damage to your car when your car hits, or is hit by, another vehicle, or other object.

Comprehensive

Covers your vehicle for losses resulting from incidents other than collision. For example, comprehensive insurance covers damage to your car if it is stolen, or damaged by flood, fire, or animals.

Emergency roadside service

Provides 24-hour service to tow your disabled vehicle to the nearest repair facility.

Rental reimbursement

Covers renting a car if your car is not drivable or while your car is being repaired because of a covered accident.

Loan GAP

Protects you if your financed car gets damaged or stolen and the value of the car becomes less than the balance of the loan. Loan GAP coverage covers the difference between the Actual Cash Value of your car and the balance of your loan.