Auto Insurance Buyer’s Guide

There are seven coverage options for auto insurance: Liability, PIP, Medical Payments, Uninsured/Underinsured Motorist, Comprehensive, Collision, Rental, and Towing & Labor. Below is a breakdown of each coverage and why you should carry it on your auto insurance policy.

Liability

Texas state law requires anyone with a driver’s license to carry liability insurance. Liability insurance pays damages you cause to another person or their property. The state minimum limit for liability insurance in Texas is 30/60/25: $30,000 per person bodily injury, $60,000 per accident bodily injury, and $25,000 property damage. At Hanby Insurance, we don’t believe this is enough coverage. Our agency recommends that everyone carry at least $100,000/$300,000/$100,000. Think about it this way: if someone were to be severely injured or killed in an auto accident, $30,000 isn’t a lot of money to cover medical expenses. You could be held personally liable for any damages over $30,000. Always carry the maximum liability coverage you can afford to make sure you are properly protected.

Medical Payments

Otherwise known as Med-Pay, this coverage pays medical bills you or your passengers may incur, regardless of who is at fault for an auto accident. You may want to carry this coverage to cover yourself or passengers who may not have health insurance.

Personal Injury Protection (PIP)

PIP covers lost wages and/or medical payments resulting from an auto accident, regardless of who is at fault. Most policies do not allow you to carry both Med-Pay and PIP; you must choose one or the other. Because PIP also covers lost wages, it is usually more expensive than Med-Pay.

Uninsured Motorist

Uninsured motorist/Underinsured motorist covers you and your vehicle if you are involved in an accident with someone who doesn’t carry auto insurance or doesn’t have enough insurance to cover the damage they caused to you or your car. Estimates show that as many as 1 in 5 drivers in Texas are uninsured. Uninsured motorist limits are similar to liability limits and typically have to match the limits you carry for liability insurance. Uninsured motorist property damage typically carries a $250 deductible.

Comprehensive

Comprehensive coverage covers damage to your automobile from sources other than collisions. This coverage is not required by law, but if you have a loan on your vehicle, the lienholder may require you to carry it. Examples of comprehensive losses include theft, vandalism, hail, flood, fire, and falling objects. Comprehensive claims are subject to a deductible. Make sure you carry a deductible you’re comfortable paying should something happen. Also, keep in mind that the higher the deductible, the lower the premiums for this coverage are.

Collision

Collision coverage covers your car if it is damaged in a collision with another vehicle or object. Collision coverage is also subject to a deductible, so make sure you carry one you’re comfortable with but that’s high enough to keep your premiums manageable. Like comprehensive coverage, collision coverage is not required by law, but is typically required if you have a lien on your car.

Rental Reimbursement

Some companies may refer to rental reimbursement as loss-of-use coverage. It does not cover you while driving a rental car; rather, it provides you with a rental car should your vehicle be in the shop for repairs due to a covered loss. Most rental reimbursement coverage is $30/day up to 30 days. However, you can purchase higher limits.

Towing and Labor

Also known as Roadside Assistance coverage. Depending on your policy, you may be able to call the company directly and have them send out a wrecker to assist you or change a flat tire. Other companies reimburse you for these expenses. Once you have paid to have the car towed or a tire changed, you can submit the paid invoice to your insurance carrier, and they will reimburse you up to the policy limit.

Now that you understand more about auto insurance coverage options, you will need to decide what coverage and limits you would like to carry. Once you have made that decision, you are ready to start shopping.

Here is a list of information you will need when you start your search:

• Driver’s license numbers and dates of birth for all drivers on the policy.
• VIN (vehicle identification numbers) for each car.
• Driving record information for all drivers (accidents, tickets, etc).
• Discount options: pleasure-use, good-student discounts, etc.

I hope this auto insurance buyer’s guide helps you in your search for car insurance.

Originally written September 6, 2012, Updated April 2016