Auto Insurance

Auto Insurance

North Carolina auto insurance is there to protect you financially when you have an accident.  It is a contract between yourself and an insurance company where you agree to pay a premium to them in exchange for them to pay for damages per your policy. 

In North Carolina, all policies provide liability coverage, and uninsured/underinsured motorist coverage.  There is additional coverage that you can add such as medical payments, comprehensive or other than collision, collision, extended transportation expense, and towing & labor among other things.

So what does this mean for you living in North Carolina?  Let’s explore this together so that you can understand what it is you pay for every month.

What is liability coverage?

When you say that you want liability only for your auto insurance this is what you are talking about.  This will pay for the damage that you cause to someone else’s car and for injuries you cause to another person.  With liability coverage you have two coverage’s’; bodily injury and property damage.

Your bodily injury coverage will pay for bodily harm, sickness or disease, and death to a person.  Your property damage coverage will pay for physical injury, destruction, and the loss of use to a tangible property.

How does this apply to you when you’re in an accident?  Let’s say you are driving down Capital Boulevard in Raleigh, or Walnut Street in Cary, or Chapel Hill Rd in Chapel Hill, or Duke Street in Durham minding your own business.  Then all of a sudden traffic has screeched to a halt and you’re unable to stop.  You ended up rear ending the car in front of you.  When you get out of your car you check on the driver and his child in the back seat.  The driver has sustained a cut to his forehead and the child is unharmed.  Your bodily injury coverage will pay for the driver to get his forehead stitched up at the hospital and your property damage will pay to repair the car you hit.

What is uninsured motorist and uninsured/underinsured motorist coverage?

The first thing that you need to know about this coverage is that your insurance company has to be able to prove that the other driver doesn’t have insurance or enough insurance.  What this means is if you are involved in a hit-and-run you can’t file a claim under this coverage unless you can find out who the other party was and if they have insurance. 

Now you may be wondering how can there be a difference between these two coverage’s , but there is a major difference.  The answer actually comes down to you! 

Uninsured motorist coverage is when you elect to purchase the North Carolina state minimum limits.  The state minimum limits are bodily injury $30,000 per person and $60,000 per accident and property damage $25,000.  When you look at those amounts you are probably thinking that’s not enough coverage and I completely agree with you.  What happens when you elect to purchase these limits is that you can only file a claim under this coverage if the other person doesn’t have any insurance.  If you need more than $30,000 for your medical bills or $25,000 to repair or replace your car, then you have to pay for that out of your own pocket unless you have collision coverage on your car, more on that later.

Uninsured/underinsured motorist coverage is the best option of the two give to you.  With this coverage you can file a claim if the other person doesn’t have any insurance or enough insurance.  Generally your uninsured/underinsured motorist limits will match your bodily injury and property damage limits.  This coverage will help to protect you if you are injured or your vehicle is damaged by someone who has chosen to purchase the state minimum limits or limits below what you have. 

Many people think of this coverage as wasted money because you are paying money to protect yourself because someone decided to skirt their financial responsibilities.  I would tell you that this is not the case and instead this will help to protect you and your family from financial devastation. 

What are medical payments?

Medical payments will pay reasonable expenses for injures that you, your passengers, and your family members sustain in an accident regardless of who is at fault.  There is an expiration date on when you can file a claim under your medical payments coverage and that is three years from the date of the accident, so don’t wait too long. 

A great aspect about this coverage is that you can file a claim under medical payments if you or your family member, that resides at the address on the policy, is injured in another car or as a pedestrian, so keep that in mind for the future.

Many people ask why it’s necessary to have medical payments when you have health insurance, but medical payments could help you cover co-pays or if your health insurance doesn’t cover something.

What is comprehensive or other than collision coverage?

Depending upon which insurance company you elected to purchase your North Carolina auto insurance with will depend upon if your policy says comprehensive or other than collision.  I know, confusing, but it won’t be in a just a few moments.  Just remember regardless of what your insurance company calls it the following information will apply.

There are ten causes of loss that this coverage pertains to:

  1. Missiles or falling objects
  2. Fire
  3. Theft or larceny
  4. Explosion or earthquake
  5. Windstorm
  6. Hail, water or flood
  7. Malicious mischief or vandalism
  8. Riot or civil commotion
  9. Contact with bird or animal
  10. Breakage of glass

The most common claims under this coverage are for damage to your windshield or hitting an animal.  If you have a crack in your windshield and it can be repaired, then its zero cost to you.  That’s right the insurance company is actually giving you something for free.  Just remember next time you have a small chip or crack in your windshield call your North Carolina auto insurance agent right away.

With this coverage you have a deductible that you’ll have to pay.  The deductible will be between $0 and $1000 and depending upon which company you are with will dictate your deductible options.  The most common options are $0, $100, $250, $500, or $1000.  Please keep in mind that one of the most common claims is for your windshield and that the cost to replace a windshield is generally under $500.  This means that if you have a $500 or $1000 deductible your auto policy won’t pay to replace your windshield because it costs less than your deductible.  However, you can have a $500 or $1000 deductible and still get your windshield repaired with a zero cost to you.

What is collision coverage?

This will provide coverage for damage to your vehicle that is not listed above under comprehensive or other than collision coverage.  The official definition is the upset of your covered auto or a non-owned auto or their impact with another vehicle or object.

Here are some examples of collision claims:

  1. Your vehicle rear ended another vehicle causing damage to your own vehicle.
  2. Your vehicle hit a patch of ice, slide off the road, and hit a telephone pole.
  3. Your vehicle hydroplanes and runs into a building.
  4. You come out to your vehicle after grocery shopping and there’s a large dent in the rear bumper of your vehicle.

Like with comprehensive or other than collision coverage your deductible options range between $0 and $1000.  The most common options are $250, $500, and $1000.  When it comes to choosing this deductible option, and this applies to your comprehensive or other than collision deductible too, you want to choose a deductible based on three criteria:

  1. If you had to file a claim tomorrow would you have the money available to pay it?
  2. At what amount would you file a claim for damage to your vehicle?
  3. How much will the coverage cost plus your deductible compared to how much your vehicle is worth?

For example, you follow Dave Ramsey’s philosophy of having an emergency fund that begins with $1000.  This means that you have $1000 set aside for an emergency such as damage to your vehicle.  You have made the decision that if the cost to repair your vehicle is less than $1000 you would pay out of pocket.  The cost to have this coverage on your policy is $250 for the year plus your $1000 deductible which would make your cost $1250 if you filed a claim.  You compare this to your vehicle being valued at $10,000 and you decided it’s worth having the coverage.  After looking at these three criteria you’ve made the decision that having a $1000 deductible is your best option.

What is extended transportation expense?

Extended transportation expenses will be for transportation expenses incurred by you when there is a loss to a covered vehicle and you are paying a premium for this coverage.  In other words if you file a claim with your insurance company and they are paying to fix your vehicle, then they will also pay for a rental car for you while it’s being repaired.

This coverage is not if your vehicle is in the shop because you need your brakes replaced or your transmission rebuilt.  The reason for this is your auto policy is not a maintenance policy.  It doesn’t pay for you to get your oil changed or your air conditioner repaired.

With this coverage you typically have three options for coverage amounts:

$15 per day, $450 maximum

$30 per day, $900 maximum

$50 per day, $1500 maximum

Some insurance companies will actually provide the $30 per day coverage for free if you have other than collision/comprehensive and collision coverage.  If not, then the cost is typically $20 per year per vehicle.  If you increase it to the $50 per day, then the cost is typically $32 per year per vehicle.

This is a coverage that I highly recommend for you to have.  The cost to rent a car is generally more than $20 or $32 per day and can add up quickly if your vehicle will take a couple weeks to be repaired.

What is towing & labor?

Towing and labor coverage will pay for towing and labor costs for each time your vehicle is disabled or keys are lost, broken or accidently locked in the auto.  Here are some examples of how you can use this coverage:

You are driving to work on Monday morning and you get a flat tire.  You have to call a tow truck company to come out to put the spare tire on for you or tow it to your favorite repair shop. 

You get home from work on Monday evening and you forget to grab your keys out of the ignition.  You lock the doors out of habit and as you get to your front door you realize you don’t have your keys.  You have to call a company to come out and assist you with getting your keys out of your vehicle.

There are a few things that you need to know about how this coverage will work and it differs from company to company.  The majority of the companies do this on a reimbursement basis.  What this means is that you are responsible for calling a tow truck company, then you pay the tow truck company, and then you submit the receipt or invoice to your insurance company.  There are a few insurance companies that offer more of a roadside service which means they act more along the lines of AAA.

The cost of this coverage is very, very inexpensive.  The cost is $6 per year per vehicle for coverage in the amount of $100 per disablement.

Quick recap

Your North Carolina auto insurance has several coverages to protect you and your family in the event of a claim.  Your bodily injury and property damage coverage will protect you financially when you cause injury to another person and damage to another vehicle or property you don’t own.  Your medical payments, uninsured/underinsured motorist, other than collision/comprehensive, collision, extended transportation expense, and towing and labor will protect you and your vehicle.

We would recommend talking with your North Carolina independent insurance agent about what liability limits you need, what deductible amounts you need, and any other coverage that you need to protect you and your family. 

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