How Much Insurance Do I Need on My Vehicle?

While some people's inclination may be to obtain the minimum amount of car insurance required by law, those amounts may not be enough in the event you're involved in an accident deemed your fault. In North Carolina, for example, state law requires that you have liability coverage in the minimum amounts of 30/60/25. This means your coverage will pay up to $30,000 per person and up to $60,000 per accident for those individuals injured in an accident for which you are held liable. It also pays up to $25,000 toward property damage caused, including other vehicles, structures, etc.

It's not difficult to imagine that a serious accident could create financial liabilities far exceeding these state-mandated insurance minimums. Bear in mind that in NC, which is an "at fault" state, any amounts over your policy limits in an accident for which you are held responsible will come out of your own pocket, including potential lawsuits. For this reason, many experts recommend that the amount of liability insurance you carry be equal, at least, to the amount of the value of all your assets. This would include the value of your:

• Real estate
• Vehicles
• Personal possessions
• Investments, and anything else of value you own

The idea here is to carry as much liability coverage as you need to protect your assets in the event of a catastrophic loss for which you are held liable. Those with significant assets may consider the addition of an umbrella policy to their insurance portfolio. A well respected insurance agency can held you decide the proper course of action in this area.

Other Auto Insurance Needs

It should be understood that the liability coverage previously described only pays for losses suffered by "the other guy," and does nothing to compensate you for your own personal losses, whether in the form of injuries or property damage, including your vehicle. To be protected in these areas you're required to add other, optional coverage to your policy. These may include:
Collision coverage - which pays for the repair or replacement of your vehicle when damaged in an accident. You should have enough coverage to equal the replacement value of your car (not how much you paid for it).

Comprehensive coverage – pays for vehicle losses you suffer in other than accident scenarios. These include theft, vandalism, fire, hail (or other weather damage), falling objects, damage from animals and broken glass incidents.    

Understanding How Comprehensive Coverage Works

When buying car insurance for a vehicle registered in North Carolina there are several things you should know before deciding what type and how much insurance you want to place on your vehicle. A well-established insurance agency should be able to help you understand what may be needed for your own car insurance requirements, depending on your personal situation, and you shouldn't hesitate to seek the free advice they can offer. In the meantime, here's some basic information that may help you understand the options you'll be facing when purchasing a car insurance policy.

What's Required

In NC, known as a car accident "fault" state (as opposed to a "no-fault" state), if you're found legally at fault for causing a vehicle accident you are then held legally responsible for any liability caused in the way of property damage, bodily injury or the death of any others involved. Financial payment for these damages is usually paid through your car insurance company, which is precisely why every car owner should have adequate auto insurance coverage in force. NC law requires that every driver registering a vehicle for road use must have a minimum amount of liability insurance in force. In this state, minimum liability coverage amounts are:

• $30,000 per person paid toward bodily injury
• $60,000 per accident paid toward all bodily injury claims
• $25,000 per accident paid toward all property damage claims

Personal Damages

Note that liability coverage provides no protection to you for your own personal losses in the way of injury or property damage, including damage to your vehicle. These types of coverage are available, but only as options that can be added on to your required liability coverage. An exception to the optional nature of this additional coverage is if your vehicle is being financed through a bank or other lending institution, in which case they may require you to obtain them in order to protect their own financial interests in your vehicle.

Collision and Comprehensive

Collision insurance coverage pays when your vehicle is involved in a collision, either with another vehicle or a stationary object such as a fence, tree or power pole.

Comprehensive insurance coverage pays for losses involving your vehicle caused by other than a collision. Examples include:

• Theft or vandalism
• Fire
• Falling objects
• Damage from a bird or other animal
• Weather-related damage such as hail or flood
• Broken glass, such as from a nearby explosion 

What's the Right Deductible for My Home Insurance?

Choosing the right deductible on your homeowners insurance is important for your peace of mind and, since all homeowners policies have deductibles attached to them, this is a decision you'll have to make when you take out your coverage. A deductible is the amount of money that you're basically willing to risk in a form of self-insurance. It's the amount that will come out of your pocket in the event that you make a claim against your policy, before your insurer kicks in their portion. If, for example, you have a $500 deductible and you make a claim amounting to $1500, you would only receive $1000 from your insurer, assuming they pay the claim in full. You don't actually write them a check for your $500 portion – they merely deduct that amount from their payout.

Choosing Your Homeowners Insurance Deductible

Insurance companies know that the higher your deductible amount, the less likely you are to submit small claims to them, since these claim amounts will often be less than your deductible amount. In one respect, this will work in your favor, since frequent claims can often trigger a rise in your premium rates or even cause the insurer to drop your policy altogether.

The main reason for choosing higher deductibles is to save money on your premium payments, since higher deductibles translate into lower rates. The other side of the coin, however, is that one single large claim could wipe out your savings if your deductible is set at $5000 or $10,000. Insurance companies typically offer deductible amounts of $250, $500, $1000 or higher. For you, it's a balancing act of how much you can save in monthly premium payments versus your appetite for the risk of taking a big hit in the event of a claim.

Not All Claims Are Advisable

If you choose a lower deductible like $250 and you suffer a minimal loss such as a broken picture window that costs $350 to replace, it might not be worth it to make a claim for such a small amount, since any claim counts as a mark against you in the eyes of the insurer. Choose a deductible amount with which you're comfortable, take the money you save in premium dollars by not choosing a minimum deductible and stick it in your emergency fund. You should come out ahead, still knowing you're covered for any major loss.

How Does Flood Insurance Work?

Flooding, which is something capable of bringing serious damage and even total destruction to your home and possessions, is one peril not covered by most standard homeowner's insurance policies. Flood insurance is a specialized type of coverage that's provided through the NFIP, or National Flood Insurance Program, which is run by the FEMA, the government's Federal Emergency Management Agency. The program has been in place since 1968 when it was officially authorized by Congress.

Flood coverage policies are sold and administered by professional insurance agents like Tom Needham Insurance and cannot be purchased directly from the NFIP, although annual premium payments are made to FEMA. Coverage is available nationwide, with average costs running just slightly less than $600 per year, although properties located in high risk areas will experience significantly higher rates. Total annual premium amounts are required to be paid up front. 

Flood Insurance Particulars

Some home and business owners are required to have flood insurance, while for others it's optional. The NFIP has mapped out sections of the country according to perceived flood risk levels, and those living in high-risk areas, designated as a Special Flood Hazard Area (SFHA), are required to be covered if they have a mortgage loan from a federally regulated/insured lender. Those living outside designated SFHAs are still eligible to purchase the coverage and, typically, at lower, preferred rates.

Policy limitations for homeowners are $250,000 for structural damage and $100,000 for contents. Renters can be covered for up to $100,000 in losses of personal property. Non-residential (commercial) property has coverage limitations of $500K for structural damage and $500K for contents. After coverage is purchased, there's a 30-day waiting period before the policy goes into effect. There are a few exceptions to this, all explained on the NFIP's website.

Local Problem Areas

While most of the Greensboro and High Point areas are rated as minimal risks for flooding, recent heavy rains have been responsible for causing problems in many areas such as around the High Point Regional Hospital on Elm and areas around Main and Bus. 85. Properties around High Point Central High on Ferndale also typically see high or standing water problems in response to heavy rains such as have recently been experienced.

The Latham Park section of Greensboro also typically floods after heavy rains due to the proximity of North Buffalo Creek. There are other areas at risk. You can check your flood risk level right here.

How Do Car Insurance Claims Work?

There's an old saying sometimes used by insurance agents that goes something like, "Insurance - it's better to have it and not need it than to need it and not have it." Of course, if you wait until you need it before you decide to buy car insurance then you've waited too long. That would be akin to closing the barn door after the mare has already bolted.

On the other hand, if you spend your whole driving career covered by a comprehensive car insurance policy and never have occasion to file a claim, what you've paid for is a lifetime of protection that was there "just in case." The fact is, however, most drivers will file a claim sooner or later. According to the Insurance Information Institute, most drivers submit a claim every eight to ten years so, when the need does arise, it's not something with which you're likely too familiar. Here's some info about how car insurance claims work.

Filing a Claim

Even minor vehicle accidents can cause confusion, but it's important to keep your wits about you to ensure proper steps are followed after any incident. Having a simple checklist in your glove box can help. A cell phone with a camera or, at least, a pen and notebook should be available.

When you notify your insurer that you've had an accident a claim will be opened and you'll be assigned a claims adjuster. It's important that you provide as much accurate information as possible to the company so make a record of everything. Taking photos will help. Information you'll need include:

• Date and time of the accident
• Make, model, license plate number and registration information of other vehicles involved
• Other drivers' personal information, including driver's license numbers
• Name of their insurer and contact info
• Responding police officer's name and badge number

Your adjuster will examine your policy to determine your level of coverage, obtain the police report filed and contact those involved, including witnesses. The cause of the accident will be determined and the claim will be handled in accordance with all applicable information gathered. Providing your carrier with complete and accurate information will help speed up the process.

Your insurer is responsible for all contacts made with the other driver's insurance company. If your vehicle has been damaged but is still safely driveable, you may be asked to bring it in for a damage inspection.