If you want to drive legally, you have to have auto insurance. If you want to be protected, you probably need more than just enough coverage to be legal. Here’s what you need to know about buying car insurance and saving money while doing it.
Who Needs Auto Insurance?
Everyone driving on a public road in Wisconsin needs auto insurance. This includes cars, trucks, SUVs, vans, and more. Some types of vehicles, like RVs or motorcycles, have their own special types of insurance policies that cover the same thing as auto insurance. If you drive for business, you may need a business policy instead of a personal one.
What Does Auto Insurance Cover?
There are many different coverage options within each auto insurance policy. What coverage you have depends on the options you select.
Bodily Injury Liability
Bodily injury liability covers injuries you cause to other people. It doesn’t cover your own injuries. For example, if you cause an accident and both you and the other driver have to go to the hospital, your liability coverage pays for that driver’s hospital bills but not yours.
Wisconsin requires all drivers to have at least $25,000 in bodily injury coverage for one person and $50,000 for a single accident. If your liability exceeds your limits, you will have to pay the other driver out of pocket, so many people buy limits that are much higher than minimum coverage.
Property Damage Liability
Property damage liability covers damage you cause to other people. Like bodily injury liability, it only pays for repairs to the other driver’s car, not your own.
Wisconsin requires you to have property damage liability coverage of $10,000 or more. Since many cars are worth more than this, you probably want to choose higher limits to protect your savings and assets if you cause an accident.
Uninsured and Underinsured Motorist Coverage
Even though every driver has to buy insurance, many still choose to drive without insurance illegally. In addition, your losses from an accident caused by another driver may exceed their limits, especially if they bought minimum coverage. While you can sue the other driver for the difference, that takes time and money, and there’s no guarantee that they’ll have enough money to pay what you win in court. Uninsured and underinsured motorist coverage replaces the coverage the other driver should have been carrying.
In Wisconsin, all drivers are required to carry at least $25,000 per person and $50,000 per accident in uninsured motorist bodily injury coverage. It is your choice whether you want to add uninsured motorist property damage coverage. Underinsured motorist coverage is optional, but if you buy it, the minimum limit is $50,000 per person and $100,000 per accident. The maximum limit for your uninsured and underinsured motorist coverage is typically equal to your liability coverage.
Medical payments coverage protects you and your passengers from expenses not covered by your health insurance. This could include your deductible, co-pays, or excluded expenses. Therefore, you should discuss your health insurance coverage with your insurance agent when deciding if you need medical payments coverage. Medical payments coverage may also cover funeral expenses, which health insurance does not.
Collision coverage pays for damage to your car in an accident. This can include collisions with another vehicle or with an object. Collision coverage is priced based on what type of car you’re insuring, so there’s no specific limit to choose.
Comprehensive coverage covers non-accident damage to your car. This includes things like hail, theft, and falling objects. Hitting deer or other animals may also be a comprehensive claim, rather than collision, so ask your insurance agent what you need if this is something you’re worried about.
Most insurance companies carry your collision and comprehensive over to a rental car with possible limits on the type or value of the rental car. Rental coverage or rental reimbursement refers to the insurance company paying for you to rent a car while your car is in the shop for repairs after a covered claim.
If you add roadside assistance, the insurance company will send someone to help you if you run out of gas, have a flat tire, get locked out, need a tow, or have other problems. Often, these services are free up to a certain number of incidents per year, and you also get the benefit of having pre-negotiated rates for any services you have to pay for.
What Deductible Should You Choose?
Raising your deductible can help you save on your premiums since you’d be handling smaller claims on your own, and the insurance company would potentially have less to pay. When choosing your deductible, think about the maximum amount you could comfortably spend out of savings after an accident. Then, compare that amount against the premium savings from going to a higher deductible to see if you’re happy with the risk versus reward. If you wouldn’t want to spend money out of pocket after an accident, go with a lower deductible.
How Do Auto Insurance Companies Calculate Rates?
Insurance companies use a wide number of factors to calculate your rates including age, gender, type of car, address, driving record, and more. Because these models are so complex, a change in one factor could mean that the insurance company that gave you the highest quote last year is now your cheapest option. The only way to know for sure what you will pay is to get a current quote.