AUTOMOBILE INSURANCE IS not the most
exciting topic, but it is an important one. As much
as we do not want to think about negative circumstances, when it comes to not having the right auto
insurance coverage, all it takes is one serious accident to leave you or your family in ;nancial ruin.
Automobile insurance requirements vary from
state to state. Unless you live in New Hampshire,
you are legally required to carry minimum levels of
automobile insurance to ensure that you can cover
the cost of damages or injuries in the case of a car
accident. Here is what you need to know
about your policy and coverage.
How coverage is priced
In California, Hawaii
and Massachusetts, prices
are based largely on your
driving record, miles
driven annually and
other factors. In all other
states, companies use
your credit ;les to predict the odds that you will
;le a claim. If your score is
not up to their standards,
you will pay more.
Other data may come into
play. One insurance company we
spoke with uses overall accident rates
in cities to determine prices; if more accidents
are reported in one city, rates there will be higher.
Terms on your policy
In general, here is what your policy terms mean.
• Bodily injury liability covers medical treatment, rehabilitation and funeral costs incurred by
your passengers, other drivers and their passengers,
and injured pedestrians. Other costs covered
include legal fees and nonmonetary losses related to
pain and su;ering.
• Property damage liability covers the repair or
replacement of other drivers’ vehicles and property.
• Uninsured/underinsured motorist covers
losses caused by another driver who has insu;cient
or no car insurance, including medical and funeral
costs of victims in your car as well as pain and suffering losses.
• Collision pays to repair or replace your car
a;er an accident.
• Comprehensive protects your car against
damage not resulting from a collision, such as damage caused by certain natural disasters, vandalism,
;re or water. It also protects your car from the;.
• Medical expense pays the deductibles and co-payments not covered by your or your passenger’s
health insurance. It also covers some funeral and
• Loan/lease gap coverage protects you from
paying out the di;erence between the amount you
owe on your car loan and the car’s estimated value.
How much do you need?
Your goal should be to protect yourself in case
of a serious accident. State minimum coverage gives
you minimal protection and is not enough to protect the assets of most drivers. If you don’t have
enough coverage on your policy and a serious accident occurs, your personal assets could be at risk to
settle an insurance claim.
Personal injury expert and Costco
member Abram Zukor of Zukor
and Nelson LLC, in Beverly
Hills, California, says, “It’s not
enough that you carry insurance to protect yourself.
You have to protect yourself from uninsured or
He suggests a minimum
of $100,000/ $300,000
bodily injury liability/
uninsured motorist coverage as a standard for all liability categories, because “it
protects you if you are sued or in
an accident with an uninsured or
Medical expense coverage
Sometimes called “med pay,” this coverage can
help, because even though you may have health
insurance coverage, you still need to cover costs for
anyone who may be in your car at the time of an
accident. Medical payment coverage is also important if you may need to cover treatment from a doctor or practitioner who does not accept insurance or
who has high co-pays you may not be able to meet.
Saving money on coverage
;ere are money-saving measures you can take
without putting yourself at risk.
• Report reduced mileage if your vehicle usage
has changed. By driving less, you may qualify for a
lower premium. Make sure it’s an honest assessment; many insurance companies now have info-matics that enable them to more accurately predict
and/or verify mileage utilization. If a discrepancy is
found, your premium can be adjusted to re;ect that
and/or your policy can be canceled.
• If you are buying a car, research typical repair
costs before you buy. Cars that cost more to repair,
or are popular with thieves, can cost more to insure.
• If you’re driving a dependable beater not
worth more than a few thousand dollars, consider
dropping collision coverage to save money. C
Auto insurance help
Educating yourself on coverage
David Horowitz is a leading
consumer advocate. David’s
daughter Amanda Horowitz
is the CEO of Fight Back! and
co-founder of FightBack.com.
Questions and answers of the
greatest interest to Costco
members will be used in this
column (with the permission
of the contributor) and will be
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