Protecting Yourself against Uninsured Motorists

Protecting Yourself against Uninsured Motorists

Overlooked Auto Insurance Options

About one out of every eight U.S. drivers does not have an auto insurance policy, even though it is mandatory to purchase this coverage in 49 out of 50 states (New Hampshire is the exception), according to the Insurance Research Council (IRC). In several states, more than one in five drivers do not carry coverage.

If you’re involved in a serious accident with an uninsured motorist, you could be at risk for substantial financial losses.

For protection from losses arising from an accident with an uninsured motorist, consider purchasing uninsured motorist coverage. A handful of states require that this coverage be included in all auto insurance policies. Regardless of state requirements, you may already carry uninsured motorist coverage, so check your policy or ask your insurance professional.

 

Types of Uninsured Motorist Coverage

Specific options for uninsured motorist coverage vary by state and insurer, but in general there are three types of protection:

• Uninsured Motorist (UM) Insurance—Also known as Uninsured Motorist Bodily Injury (UMBI) insurance, this coverage will pay your and your passengers’ medical bills if you’re involved in an accident with an uninsured motorist who is at fault. In addition, UM insurance will reimburse you and your passengers for lost wages. UM coverage also kicks in if you are hit as a pedestrian by an uninsured driver, or if you’re the victim of a hit-and-run accident.
• Uninsured Motorist Property Damage (UMPD) Coverage—While UM insurance covers injuries, it does not extend to damage to your car or property. For this, you need UMPD coverage. Note that UMPD may not cover damaged property beyond your car, and this option may not be available from your insurer—it depends on what state you live in. In addition, UMPD may not cover hit-and-run accidents.
• Underinsured Motorist (UIM) Protection—In some instances, an at-fault driver may have liability insurance, but the policy’s limits do not cover the full extent of damage to your vehicle. In such cases, UIM insurance will cover the shortfall.

 

Auto Insurance for Lower-Income Drivers

Ideally, you’ll have sufficient auto insurance to provide financial protection for any collision. Uninsured motorist coverage offers an important layer of protection, though making an uninsured motorist claim should be a last resort. You can help limit the chances of such an occurrence for someone else by making sure that you always carry auto insurance yourself.

To help ensure that everyone, regardless of financial circumstances, can obtain car insurance, some states, such as California, have programs to assist lower-income drivers. Check with your state’s insurance division to see if your state has such a program. In addition, shop around. Some insurers specialize in writing policies for lower-income consumers.

What Is Covered by a Basic Auto Insurance Policy?

What Is Covered by a Basic Auto Insurance Policy?

Your auto policy may include six coverages. Each coverage is priced separately.

1. Bodily Injury Liability

This coverage applies to injuries that you, the designated driver or policyholder, cause to someone else. You and family members listed on the policy are also covered when driving someone else’s car with their permission.

It’s very important to have enough liability insurance, because if you are involved in a serious accident, you may be sued for a large sum of money. Definitely consider buying more than the state-required minimum to protect assets such as your home and savings.

2. Medical Payments or Personal Injury Protection (PIP)

This coverage pays for the treatment of injuries to the driver and passengers of the policyholder's car. At its broadest, PIP can cover medical payments, lost wages and the cost of replacing services normally performed by someone injured in an auto accident. It may also cover funeral costs.

3. Property Damage Liability

This coverage pays for damage you (or someone driving the car with your permission) may cause to someone else's property. Usually, this means damage to someone else’s car, but it also includes damage to lamp posts, telephone poles, fences, buildings or other structures your car hit.

4. Collision

This coverage pays for damage to your car resulting from a collision with another car, object or as a result of flipping over. It also covers damage caused by potholes. Collision coverage is generally sold with a deductible of $250 to $1,000—the higher your deductible, the lower your premium. Even if you are at fault for the accident, your collision coverage will reimburse you for the costs of repairing your car, minus the deductible. If you're not at fault, your insurance company may try to recover the amount they paid you from the other driver’s insurance company. If they are successful, you'll also be reimbursed for the deductible.

5. Comprehensive

This coverage reimburses you for loss due to theft or damage caused by something other than a collision with another car or object, such as fire, falling objects, missiles, explosion, earthquake, windstorm, hail, flood, vandalism, riot, or contact with animals such as birds or deer.

Comprehensive insurance is usually sold with a $100 to $300 deductible, though you may want to opt for a higher deductible as a way of lowering your premium.

Comprehensive insurance will also reimburse you if your windshield is cracked or shattered. Some companies offer glass coverage with or without a deductible.

6. Uninsured and Underinsured Motorist Coverage

This coverage will reimburse you, a member of your family, or a designated driver if one of you is hit by an uninsured or hit-and-run driver.

Underinsured motorist coverage comes into play when an at-fault driver has insufficient insurance to pay for your total loss. This coverage will also protect you if you are hit as a pedestrian.

Why should I buy life insurance?

Why should I buy life insurance?

Many financial experts consider life insurance to be the cornerstone of sound financial planning. It can be an important tool in the following situations:

Replace income for dependents

If people depend on your income, life insurance can replace that income for them if you die. The most commonly recognized case of this is parents with young children. However, it can also apply to couples in which the survivor would be financially stricken by the income lost through the death of a partner, and to dependent adults, such as parents, siblings or adult children who continue to rely on you financially. Insurance to replace your income can be especially useful if the government- or employer-sponsored benefits of your surviving spouse or domestic partner will be reduced after your death.

Pay final expenses

Life insurance can pay your funeral and burial costs, probate and other estate administration costs, debts and medical expenses not covered by health insurance.

Create an inheritance for your heirs

Even if you have no other assets to pass to your heirs, you can create an inheritance by buying a life insurance policy and naming them as beneficiaries.

Pay federal “death” taxes and state “death” taxes

Life insurance benefits can pay estate taxes so that your heirs will not have to liquidate other assets or take a smaller inheritance. Changes in the federal “death” tax rules between now and January 1, 2011 will likely lessen the impact of this tax on some people, but some states are offsetting those federal decreases with increases in their state-level “death” taxes.

Make significant charitable contributions

By making a charity the beneficiary of your life insurance, you can make a much larger contribution than if you donated the cash equivalent of the policy’s premiums.

Create a source of savings

Some types of life insurance create a cash value that, if not paid out as a death benefit, can be borrowed or withdrawn on the owner’s request. Since most people make paying their life insurance policy premiums a high priority, buying a cash-value type policy can create a kind of “forced” savings plan. Furthermore, the interest credited is tax deferred (and tax exempt if the money is paid as a death claim).

Cheapest Cars to Insure in 2015

Cheapest Cars to Insure in 2015

Auto insurance protects you against financial loss if you have an accident. It is a contract between you and the insurance company. You agree to pay the premium and the insurance company agrees to pay your losses as defined in your policy. Auto insurance provides property, liability and medical coverage:

Property coverage pays for damage to or theft of your car.

Liability coverage pays for your legal responsibility to others for bodily injury or property damage.

Medical coverage pays for the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses.

An auto insurance policy is comprised of six different kinds of coverage. Most states require you to buy some, but not all, of these coverages. If you're financing a car, your lender may also have requirements. Most auto policies are for six months to a year. Your insurance company should notify you by mail when it’s time to renew the policy and to pay your premium.

There's a lot to take into account when buying a new vehicle. How it feels and looks is important, but how much it costs -- including fuel consumption, potential resale value, and monthly auto insurance premium -- is usually the deal breaker. To help buyers determine which cars are truly the cheapest, Cheapism.com turned to a recent comparison of insurance rates for more than 1,500 vehicles by Insure.com.

This list of the 15 cheapest cars to insure reflects the annual cost of full coverage by six major insurers for a 40-year-old male driver with good credit, a clean record and a 12-mile commute in 10 ZIP codes in each state. Unsurprisingly, family vehicles that are typically driven by cautious parents are cheaper to insure than flashy sports cars, but other affordable models may not be what you expect.

Jeep Wrangler Sport: $1,134 a Year. The least expensive standard model Wrangler on the market, this two-door, 4x4 SUV is notable for its 3.6-liter Pentastar V6 engine and iconic looks. This model also recently ranked first in terms of resale value for compact SUVs. (It retains 57.4 percent of its original list price of $23,500 after five years.)

Jeep Patriot Sport (2WD): $1,136 a Year. Cheaper (starting at $16,895) and roomier than a Wrangler, the two-wheel-drive Jeep Patriot is better suited for family driving than off-roading. Cruise control and 16-inch wheels are standard, but the Sport package lacks power accessories and air conditioning. Car site Edmunds.com asserts there are better options for consumers than the Patriot, citing drawbacks such as insufficient storage space, disappointing ride quality, and lackluster basic options.

Honda CR-V LX (AWD): $1,160 a Year.The LX is the simplest of the available trim packages but still comes with a rearview camera and hands-free text messaging. All CR-V models are powered by a 2.4-liter, four-cylinder engine, although the all-wheel drive included in this model is an upgrade. The CR-V ranked best in a U.S. News & World Report list of affordable compact SUVs and starts at $24,695. The review highlights a spacious interior, responsive steering, and good fuel economy.

Dodge Grand Caravan SE Plus: $1,162 a Year. The top-ranking minivan on the list, the Dodge Grand Caravan carries a mixed reputation but offers some features consumers may like. The second and third rows of seats can be laid flush with the floor, creating plenty of cargo space and the rear seats can be flipped to face the back for tailgating. The SE Plus starts at $25,245; the cheapest trim package, the AVP, starts at $21,795. This is the last year the Caravan will be available; Dodge is dropping it from the lineup.

Honda Odyssey LX: $1,163 a Year. The Honda Odyssey minivan is a favorite among car critics, although at $28,975, it's more expensive than others on this list. Still, it's noteworthy for its smooth handling, quiet and comfortable ride, safety rating, and fuel efficiency (for its class). The LX is the base model but still includes a rearview camera, Bluetooth, Pandora compatibility and power-adjustable front seats.

Jeep Compass Sport (2WD): $1,164 a Year. This third Jeep model on the list, like the Patriot Sport, is less expensive than a Wrangler, at $18,995. It's also less Jeep-like, in that off-roading may just be off-limits for this front-wheel-drive model. That doesn't mean it's not a good compact SUV, though; it gets decent reviews from experts at Edmunds and The Car Connection, a review and research site.

Subaru Outback 2.5i: $1,176 a Year. The 2015 Outback has been redesigned and offers a roomy interior, sleek body and precise steering. All Outbacks come standard with all-wheel drive, making this a suitable vehicle for outdoor adventures. Motor Trend concludes that the 2015 Outback is bigger and handles better than the competition. The 2.5i is the base model and starts at $24,895.

Ford Edge SE (2WD): $1,176 a Year. A mid-size crossover that seats five, the Ford Edge SE is comparable to the Honda CR-V LX, according to The Car Connection, (although this model has front-wheel drive). Other reviewers appreciate the high-quality look and feel, EcoBoost engine and quiet ride. This base model has a list price of $28,100.

Smart Fortwo Pure: $1,186 a Year. The Smart Fortwo is a two-seater car about half the size of a sedan, which makes finding a parking space amazingly easy. But the same $13,270 and up that you'll spend for this model can buy a more comfortable ride that isn't scary to drive on a freeway. The Pure package is bare-bones, although there are options for power windows and mirrors ($80), radio ($350) and power steering ($550). Air conditioning comes standard.

Ford Escape S (2WD): $1,190 a Year. One of the best-selling crossovers on the market, the Escape stands out with its styling and acute handling. Reviewers say it's fun to drive on winding roads, although it can feel a bit firm at times. Even the basic S trim level (starting at $22,960) comes with full power accessories, six-speaker sound system, air conditioning, rearview camera and Ford's Sync voice command system.

Nissan Xterra X (2WD): $1,200 a Year. Based on a shared Frontier pickup platform, the Nissan Xterra (starting at $23,660) boasts the same easy-to-clean interior. The Car Connection notes that owners give up some comforts (those easy-to-clean surfaces are hard plastic) but get a vehicle that's versatile, spacious, and ready for off-roading.

Dodge Journey AVP: $1,201 a Year. The American Value Package, the base model, starts at $20,295 and is a good budget option for consumers seeking a midsize crossover. The Journey AVP seats five, but an optional third row adds an additional two seats. The four-cylinder engine can feel strained, but it's the only option available at this trim level.

Buick Encore: $1,205 a Year. The Buick Encore, a subcompact crossover, is slightly larger than a standard hatchback and feels more luxurious than the competing Honda HR-V, Mazda CX-3 and Jeep Renegade, but there's no need to pay for a luxury marque. The Encore is available for $24,065 and up. There are five seats, but in reality it fits only four adults comfortably. Reviewers also say the 1.4-liter engine doesn't have enough oomph, or the fuel efficiency one might expect from a small-engine subcompact; they like just about everything else.

Chevrolet Spark LS (Manual): $1,206 a Year. The Chevy Spark is a four-door hatchback that works well for city drivers and is kind to the pocketbook: This model's MSRP is just $12,270. Despite being small and light, the Spark feels and drives like a "real car," Edmunds says. This practical car seats four and gets up to 40 mpg. The basic LS trim comes with air conditioning, power windows and a four-speaker sound system.

Toyota Tacoma Access Cab (2WD): $1,210 a Year.The only pickup on this list is a leader in the compact/midsize class. The Tacoma isn't as powerful nor as comfortable as a full-size but is known for durability and does well when stacked against the competition. The basic, two-door Access Cab version comes with a 2.7-liter, four-cylinder engine, air conditioning, manual transmission and two rear seats that are best suited for children. It's an easy pickup to drive, but with a starting price of $20,965, it's more expensive than comparable models.