Understanding Automobile Insurance Laws

The no-fault potion of your coverage pertains to bodily injuries, which means that in the event of an accident, each party is responsible for their own medical bills and other costs related to the injuries sustained in the accident. As a result, your abilities to sue the other party for damages are limited.

Automobile insurance laws also require all drivers to carry Property Damage Liability and Personal Injury Protection (PIP) coverage.

Property damage liability covers the damage you cause to another person's property. You must carry a minimum of $10,000 in coverage.

PIP covers your injury-related expenses, regardless of who was at fault in the accident. Covered benefits include some compensation for necessary medical expenses, lost wages, lost services, and funeral expenses. $10,000 worth of PIP is mandatory, although you may be able to increase your benefits by purchasing increased limits. Some drivers may choose to decrease their premiums by applying a deductible to their PIP coverage or by excluding the loss of wages benefit.

Auto insurance laws may also require that certain drivers carry Bodily Injury Liability. This coverage helps pay for the cost of injuries you cause to another in an auto accident. Drivers with previous accidents or violations may be required to carry this type of coverage.

Bodily injury liability coverage carries a minimum limit of 10/20; which means $10,000 per person for injuries you cause to the other party, up to $20,000 in total.) However, these are only minimums, and higher limits are recommended. Drivers who aren't required by law to purchase BIL are strongly urged to consider doing so for their own financial protection.

Auto insurance companies will also offer optional coverages such as collision, comprehensive, and uninsured and underinsured motorists coverage.

How Car Insurance Rates Are Set

The price of auto insurance is decided by the behavior of drivers as a whole. Auto insurance companies take the cost of providing insurance for drivers (this includes settlements and legal fees) and divide it up among the drivers.

But these costs aren't spread around evenly. Instead, the percentage you pay is decided by things like your driving record, your age, where you live, and the kind of car you drive.

Of course, not all auto insurance providers figure their percentages the same way. So they'll charge different rates on the same driver.

What this means for you as a driver, is that you need to shop the different rates (and they'll be very different!) for the best deal. It's the fastest easiest way to save on an auto insurance policy

Save on Car Insurance Endorsements

Car insurance endorsements include coverage for towing, on-site labor, and rental car expenses. These are inexpensive car insurance policies, but they're not always necessary.

Weigh their benefits versus cost. You may be able to earn a lower premium by going without them.

Towing and labor insurance is popular but usually not very economical. We recommend going with an auto club like AAA for towing and labor protection instead.

The price is similar, and auto clubs provide a lot of other additional services for their members. Dealing with an auto club will also be a lot less hassle than filing a claim every time you use the service.

Daily rental insurance may be a better deal, especially if you're a driver who really relies on their car. The cost is low and the convenience level high. However, if you have other forms of transportation available (another car, a car pool, public transport) you might want to pass. You'll get cheaper car insurance.

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