One of the lesser fun facts of growing up and ‘adulting’ is having to purchase auto insurance. It can be an overwhelming reality, there are multiple coverages involved, and if you get into an accident, pray you have the right coverages. That’s where we can help you.
Auto insurance consists of six types of coverages, yet not all of them are required by the state and each is priced separately. Each state sets minimum requirements for the mandatory coverages, and if you have a lien on your car, your lender will establish additional mandatory coverages for you to purchase.
- Bodily Injury Liability (BI)
This coverage applies to injuries that the policyholder, and those listed on the policy, cause to someone else. Essentially, BI covers the expenses related to the injury or death of another driver or pedestrian when an accident is your fault. Note that the insurance follows the policyholders, not the car. So, if the policyholder, or those listed on the policy, were to drive another person’s car with permission, they would still be covered by their personal auto insurance. Louisiana requires a $15,000 minimum Bodily Injury limit per person, and a $30,000 minimum per accident. So, the insurance company will pay out no more than $15,000 in liability for one person injured or killed, and in the event of 2+ individuals, the maximum payout would be $30,000 in one accident. Especially in Louisiana, it is highly recommended to carry more than the state required minimum. Lawsuits can be carried out for much higher values, and you never want to be caught underinsured.
- Medical Payments
BI pays for others and medical payments pays for treatment of injuries to the driver and passengers of the policyholder’s car. It can cover medical payments, lost wages and even funeral expenses (if the worst were to occur). This coverage is not required, and has a common limit of $5,000.
- Property Damage Liability (PD)
PD will cover expenses related to damage caused to someone else’s property when the accident is your fault. Other’s property may include vehicles, homes, buildings and other structures. The Louisiana minimum requirement is $25,000.
Your property damage is covered by collision coverage. If your car is damaged by another car in an accident, by a pot hole, or as a result of flipping over, it is covered. Typically, this coverage has a deductible anywhere from $250-$1000. The higher your deductible, the lower your premium for this coverage. Therefore, you have some control over your car insurance premium if you are willing to take on a little more risk. Collision is not required by the state.
Comp reimburses for loss due to theft, flood, fire, storms, or situations other than a collision with another car or object. You hit a deer last week? Comp has you covered. There is usually a deductible for this coverage as well, but again, the higher your deductible, the lower your premium. Comp is not required by the state; however, your lender may require you to have it until your car loan is paid in full.
- Uninsured and Underinsured Motorist Coverage (UM)
This coverage is not required, but I cannot emphasize enough that it is important! Unfortunately, especially in Louisiana, many drivers do not carry auto insurance, and if they are at fault and injure you in an accident, or damage your vehicle, you have no way of recouping your losses. UM will reimburse you if you are hit by an uninsured or a hit-and-run driver, or if the other driver does not have enough insurance. This coverage will also protect a policy holder who is hit while a pedestrian.
As you can see, there are many components to auto insurance, and various ways to keep your personal rates affordable. When shopping for auto insurance, let us help you at Darryl Murphy Insurance. We want to make sure you get the best price, but also the best quality insurance to protect yourself and your loved ones.