Guide to Buying Auto Insurance

Guide to Buying Auto Insurance

In Arizona, when you choose to own and drive a vehicle, you are only required by law to carry the following minimum limits of liability insurance: Bodily Injury $15,000 per person, $30,000 total per accident; and Property Damage $10,000. This coverage is only intended to cover someone else and someone else’s property if you cause an accident.

This minimum liability insurance coverage does not cover you or your property, whether an accident is your fault or not. You must understand the following:

  1. You are required to keep proof of insurance in your vehicle in case you are ever pulled over by a police officer or are in an accident. If you do not provide this proof of insurance, you could receive a citation.
  1. If you drive without at least the required auto insurance, your driver’s license and car registration could be revoked. The Arizona Department of Transportation (ADOT) is notified electronically whenever your auto insurance is no longer valid (canceled, not renewed or suspended), and will contact you.
  1. If you cause an automobile accident, you are responsible for and may have to pay for the property damage you cause, and for medical expenses, lost wages, disability, the pain and suffering of any injured person, and any other legally recoverable damages. If you do not have adequate auto liability insurance, your money, property and assets may be at risk to be taken to pay for these losses. Liability insurance, with adequate limits, will help protect you so that this does not happen.

There are several types of optional, but very important, auto insurance coverages available for you to purchase that will protect you in the event of an accident, theft or weather event:

  • Uninsured motorist – this pays for your injuries caused by other drivers who do not have auto insurance. It covers your medical expenses, lost wages, disability, pain and suffering and any other legally recoverable damages caused by an uninsured driver. It also covers you for injuries caused by hit and run drivers. You can ask your insurance agent for the limits that are available, and the cost of the premium associated with those choices. The cost for this coverage is usually less than what most people would expect and this coverage is often crucial to protecting you and any other occupants of your vehicle.
  • Underinsured motorist – this pays for injury caused by other drivers whose insurance limits are not high enough to cover all of your injury related damages. It covers your medical expenses, lost wages, disability, pain and suffering and any other legally recoverable damages caused by a driver who does not have enough insurance to pay for all of these damages. You can ask your insurance agent for the limits that are available, and the cost of the premium associated with those choices. The cost for this coverage is usually less than what most people would expect and this coverage is often crucial to protecting you and any other occupants of your vehicle.

Uninsured Motorist and Underinsured Motorist coverages protect you, your family who lives with you, your passengers and anyone who has permission to drive your vehicle (unless that person has been specifically excluded from coverage in your policy). These coverages also protect you and your family who lives with you when riding in someone else’s vehicle, walking, riding a bicycle, or even sitting on a porch. These coverages include medical expenses, lost wages, disability, pain and suffering and any other legally recoverable damages, but not your vehicle or other property. You must buy Collision coverage to pay for damage to your vehicle caused by another driver.

  • Collision coverage – this pays for damage to your vehicle in a collision, regardless of who is at fault.
  • Comprehensive coverage: this pays for damage to your vehicle caused by external factors other than a collision, like hail, water, vandalism, fire, theft, or damage caused by an animal, subject to any exclusions and deductibles in your policy.
  • Medical payments – this provides additional coverage to pay medical expenses caused by a collision, regardless of fault. You can ask your insurance agent for the various amounts of medical payments coverage available, and the premium associated with those choices.

Medical payments coverage pays for reasonable medical, hospital and limited funeral expenses for you and others injured or killed while driving or riding in your vehicle even if you are legally responsible for the accident.

  • Rental reimbursement – this reimburses you if you need to rent a car after an accident.
  • Full glass coverage – this pays to repair or replace your windshield and other glass.

If you have purchased a car and financed it with a loan, the bank or other lender will normally require you to have “full coverage” insurance. If so, this means that you will have to purchase at least the legally required liability insurance, plus comprehensive and collision coverages.

Purpose of Auto Insurance

Auto insurance is meant to protect you. When deciding what types and amounts of auto insurance coverages you should purchase, you should consider what it would cost to replace a vehicle, and how much it might cost to pay for medical expenses and lost wages due to an injury from an accident, and how much protection you want to provide yourself from the possibility that someone may pursue your personal assets for damages that exceed your insurance coverage limits.

An insurance agent can work with you determine what types of insurance coverage fits your personal needs.

Once you determine the types of coverage you want, so that you feel adequately protected in various situations, you will be provided options regarding:

  1. policy limits – the maximum that will be paid by your insurance company for a covered event; and
  2. deductibles – the amount you agree to pay out of pocket for an event covered by your collision and comprehensive coverages.

The amount of the limits and deductibles will affect the amount of your premium. The higher the limits, the more your insurance will cost. The opposite is true regarding the deductible, because that is the amount you agree to pay out of pocket. The higher the deductible is, the lower the premium will be for that portion of your policy.

An insurance agent can help you decide what insurance coverage will suit you best based on your personal financial situation.

When considering your deductible, you need to think about what you can afford to pay at any given time in the event of an accident.

For example, if you have a $500 deductible, and you have purchased comprehensive insurance for your own vehicle, and there is a hail storm that causes $3,000 worth of damage to your car, once your insurance company agrees to pay the $3,000, they will deduct $500 from that total and pay out $2,500, leaving you responsible for the remaining $500 (your deductible).

If you feel that you can afford more than the $500 deductible, you can raise the deductible to an amount that you feel you could pay, and you will save on the cost of your insurance premium.

The minimum liability insurance coverage for Bodily Injury that is required by the State of Arizona, is $15,000 per person, and $30,000 per occurrence ($15,000/$30,000).

  1. If you were to cause an accident and injure four people, the most the insurance company will pay in total for these four people would be $30,000 for their injuries.
  2. The most the insurance company would pay for any one person is $15,000. With the cost of health care these days, $15,000 doesn’t go very far, so you may wish to purchase higher limits, such as $25,000/$50,000, $50,000/$100,000, $100,000/$300,000 or higher.

The minimum liability insurance coverage for Property Damage that is required by the State of Arizona is $10,000.

  1. If you were to cause an accident that damages someone else’s vehicle or other property (buildings, fences, road signs or the contents in another vehicle), $10,000 may not be enough to pay for those damages. If you consider the cost of vehicles these days, $10,000 is usually not enough to replace a fairly new vehicle. You may be personally responsible if your property damage coverage limit in not sufficient to cover these damages.
  1. Typically, when you chose higher policy limits for bodily injury liability, the property damage limit is raised with it, so that you have more coverage for the liability portion overall.

Your insurance agent will be able to tell you what limits are available through their company, and at what cost.

Auto insurance with minimum limits of liability insurance is required by law, but the types and amounts of coverage you select is a personal choice. You will need to decide how much insurance to purchase that will make you feel well protected, yet stay within your budget. Making an informed decision is an important aspect of purchasing auto insurance. We hope this information has been helpful, and we encourage you to discuss it in detail with an insurance agent to get more information and pricing.

Please print this document and use it as a tool when purchasing auto insurance.

We hope this document makes the process of buying insurance easier for you. We strongly recommend that you find an insurance agent to help you make the best decision when selecting the right insurance coverage for you.

DISCLAIMER: This guide is provided only for informational purposes and is not intended to be a substitute for legal or other professional advice. This guide does not contain nor is it intended to provide legal or other professional advice for any specific situation and readers should not take action or refrain from taking action, based only on the information provided in this guide. Goldberg & Osborne has attempted to provide accurate and current information in this guide, but cannot and does not guarantee that the information is accurate, complete, or up to date. This guide may contain links and/or search terms that will lead to external websites as a convenience to the reader, but Goldberg & Osborne is not responsible for the content or operation of any website other than its own website. The presence of a link or a search term does not imply and is not an endorsement by Goldberg & Osborne of the website provider or the information contained on any linked website or on any website contained in search results from a search term provided in the guide.