Hello to all of my fellow Michiganders and welcome to the auto insurance guide that I have created specifically for you. This series of blog posts will be directed toward the major components of a Michigan based auto insurance policy along with the ins and outs of carriers, policy types, and coverage options.
We will explore the benefits of proper coverage and how carrying the state minimum coverage is a bad idea no matter your financial situation. There are methods to save money without lowering coverage limits while there are ways to increase coverage with no real increase in monthly premium.
I will lay out 5 key areas to review in your current auto insurance policy to improve your coverage and provide superior financial security that you and your family need. These five areas include deductibles, full-coverage, under insured motorist, uninsured motorist, and liability. These 5 overlooked areas are often contain the important coverage that your insurance agent may or may not be reviewing with you.
Deductibles: A deductible is the dollar amount that the client (you) pays out of pocket in the case of an auto insurance claim. This dollar amount is used to cover the expenses paid toward the repair of the vehicle before the person’s insurance company pays the remaining dollar amount of the damage claim.
Ask your agent about the deductible options and consider choosing the amount that is reasonable to afford in case of an auto accident. For example, while a $500 deductible will lower your monthly premium, in the case of an accident the insured would be responsible to shell out $500 before the insurance company pays for the remaining damage costs.
Full-Coverage Option: Placing full coverage on a vehicle will provide both collision and comprehensive coverage. Essentially what this means in real terms is the vehicle is “fully covered” in case of an auto insurance claim. The insurance policy will pay both collision and comprehensive claims. Collision claims are self explanatory while comprehensive coverage is used for non-car collision events such as hitting a deer or cracking the windshield.
The other less expensive coverage options include comprehensive coverage, and PLPD (state required minimums). Personal liability and property damage coverage (PLPD) does not provide coverage for the vehicle, only for liability and property damage. Talk with your agent, however it is strongly recommended to place “full coverage” on the car.
Uninsured Motorist/Under Insured Motorist: This is a crucial coverage to add to your insurance policy and it should be thought of as an absolute necessity. If your agent has not spoken with you about this he or she may not have YOUR best interests in mind. When a driver is held legally responsible and is at fault in an auto accident, the driver must pay bodily injury expenses for policy holder and passengers. If this driver does not have the required state minimum liability and property damage coverage, uninsured/under insured motorist coverage is used for this case.
In the state of Michigan insurance is no-fault, meaning that regardless of which driver is at fault, each individual’s insurance policy will pay a claim. However if the driver is legally liable for sustained injuries and property damages, then the injured party can sue the driver for compensation. Therefore even in the state of Michigan it is imperative to carry uninsured motorist coverage. Imagine how it would feel to not receive fair compensation because you overlooked this basic coverage.
Liability: This coverage on the auto insurance is equally as important as insuring the vehicle itself. Liability insurance can be sold as a separate policy to supplement coverage. Before analyzing the need for an “umbrella policy” it is important to place the proper liability limits on the auto insurance policy. Liability coverage is used to protect the insured party from legal costs and payouts that he or she is responsible for following an auto accident. The most common liability split limits are 100/300, however it is advised that most Michigan residents now carry 250/500 or 500/500.
The split limit amounts are in thousands and are measured by compensation per person/per accident. For example, if a driver is legally liable for bodily injury and property damage payouts, the insurance policy will use liability coverage to pay the insured party. If John carries the appropriate 500/500, the insured driver will receive up to 500,000 per person and a total of 500,000 per accident. Make sure you speak with an insurance agent about your assets and how much liability coverage you need.
Don’t forget these five important areas of a Michigan auto insurance policy deductibles, full-coverage, under insured motorist, uninsured motorist, and liability. While insurance is not a fun subject, protecting yourself and your family trumps everything.
Drive safe Michigan,
Managing Partner @ IHG Management