When you are a new agent you kind of enjoy those basic questions because it gives you a little test to see if you really understand what you learned in insurance school. Explaining coverages is something we do almost every day.
"Liability Only" or PLPD (personal liability and property damage)
If your vehicles don’t have much value, you may just want "liability only" depending on what you might need in the event of a mishap — just know that if something happens and you carry that coverage you would have to repair your own vehicle or get another one out of your own pocket. The only coverage you would have is for “the other guy” basically-so if you were declared at fault the other person would be taken care of. (this is what everyone on the road is supposed to have)
Also, you do receive a discount in the long run when you do not turn in any claims so in the long run if you can keep your record "claim free" it will save you money (this would mean not turning in anything you can pay for yourself). Nowadays it is hard to put money away but if you can keep a little money put aside for emergencies (like fixing a fender bender yourself) it can save you money in the long run, especially when it comes to insurance.
Also, you do receive a discount in the long run when you do not turn in any claims so in the long run if you can keep your record "claim free" it will save you money (this would mean not turning in anything you can pay for yourself). Nowadays it is hard to put money away but if you can keep a little money put aside for emergencies (like fixing a fender bender yourself) it can save you money in the long run, especially when it comes to insurance.
On the other hand if you want to make sure the small things get fixed (like a rock hitting the windshield, a big dent on the side from someone in the parking lot or if you accidentally back into your own mailbox) the additional coverage may not be too expensive if your vehicles are not very new. If you have not had a claim in a while a small claim is not going to hurt your record either.
Comprehensive coverage is for hitting an animal like a cow or deer, a rock hitting the windshield or any glass breakage, in addition to theft, vandalism, fire, windstorm, hail etc..
Collision is when you hit another vehicle and you are at fault or if you have an accident and it is too hard to decide whose fault it is. Sometimes if it is impossible to tell who was at fault it will be considered a collision. Another case for collision would be if you are in a parking lot and someone hits you and doesn’t leave a note or a shopping cart hits your vehicle etc..
If you carry both comprehensive and collision on your vehicle it is considered “full coverage”. If you have a newer vehicle you will probably want full coverage on the vehicle. If you have a loan on it, your bank will require it and ask for proof of insurance so you have no choice in that case.
Of course full coverage is more expensive but it will give you peace of mind that your vehicle will be fixed or replaced in the event of an accident--just know that if your vehicle is a total loss you will just be paid the current blue book value of the vehicle at the time of loss and that is no guarantee that will be equal to what you owe on it unless you have purchased GAP (Guaranteed Auto Protection) insurance. GAP insurance will cover the difference between the current value of the vehicle and the amount you owe the bank. This is a good thing to purchase if you have a fairly new vehicle and owe more money on the car than its current value.
We will save the rest for the next blog! Please comment if you have questions or an experience you would like to share regarding coverages.
