A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products, including home, life, auto, and commercial, and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, mainly in the insuranc...

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Reviewed by Leslie Kasperowicz
Farmers Insurance CSR 4 Years

UPDATED: Oct 15, 2021

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Important facts to know...

  • When you purchase a basic insurance policy, the policy will include liability coverage that pays for damages that you’re responsible for while you’re driving a vehicle
  • All insurance policies include standard liability coverage that pays for property repairs and for medical treatment for a third-party
  • All policies include supplemental payments benefits that will pay court fees, legal defense, bail bonds, and other related expenses after a loss occurs
  • If you carry Medical Payments or Personal Injury Protection, your auto policy will help you pay for your hospital bills and medical bills when you or your family member is injured in a vehicle-related accident
  • When you carry full coverage on your policy, the benefit is that you’ll only have to pay a deductible to cover the cost of the repair up to the car’s value

Car insurance is often considered an expensive financial product that you’re required to carry when you own a car.

While coverage is mandatory in most states, insurance should most definitely be considered a product that’s necessary because of all of the benefits that it provides to the policyholder and their family.

As you’re shopping for auto insurance, it’s extremely important to understand and recognize the benefits of having coverage.

When you know how coverage works and you know how it protects you, you’re better able to justify higher insurance costs when you carry higher limits and optional types of coverage.

Find out how much you could save by entering your zip code into our comparison tool above.

Here’s a consumer guide that details some of the biggest benefits of carrying a policy with broad car insurance coverage options:

What type of coverage is mandatory?

Compulsory insurance laws are set by the state. If insurance is mandatory where you live, which it probably is, how much and what type of insurance is required depends on the legislation that was last passed by your state officials.

In most states, you must have at least third-party coverage. Here are the most common coverage requirements:

You’ll have to carry liability coverage limits that are required by law to comply with the vehicle code when you’re the legal owner of a car.

Perhaps the biggest benefit of having the mandatory coverage requirements is that you’ll be legal on the road whenever you drive and that you can avoid penalties.

The benefits go so much deeper than just avoiding fines and other penalties. While liability coverage is a benefit that you don’t want to use, it’s a benefit that can really save the day if you do brake too quickly or a glare obstructs your vision and you sideswipe another car.

Liability coverage is a benefit in itself when you’re in an at-fault accident.

In order for your liability coverage to pay, you have to be at least 51 percent at fault for the accident and at-risk of being sued for the damages.

Your policy will pay up to your limits to repair cars, buildings, and other property that you don’t own but that you did damage. It will also pay for medical bills and ongoing treatment, which can quickly add up.

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Supplemental Payment Benefits Can Help Protect Your Financial Future

Supplemental Payments is a category of your auto insurance policy that’s not typically focused on.

When you buy any type of personal policy, no matter how broad or minimal, the policy includes a supplemental payments benefit that helps to cover some expenses that can be incurred after an accident.

Here are some of the benefits included:

  • The expenses that the insurer incurs investigating a claim
  • The expenses that the insurer incurs to defend the insured against covered liability claims
  • The costs to settle a claim on behalf of the insured
  • The cost to file a bail bond of up to $250 after an accident or traffic violation

Have you ever considered what would happen to your financial future if you got into a serious accident and you didn’t have any type of liability coverage?

If you’re taken to civil court and found guilty, the judge could order that you pay thousands of dollars in medical bills, repair bills, and court costs.

If you don’t have cash on hand to pay the settlement, this could lead to wage garnishments and even the liquidation of your assets.

When you work hard to earn money and buy property, the last thing that you want to do is lose it because you were uninsured or had low limits of liability. This is why building a comprehensive policy is a must.

What is the benefit of carrying Uninsured Motorist Protection on your policy?

Uninsured Motorist must be offered by most licensed insurance companies in most U.S. states. Since it’s a coverage that you have to reject in writing, it’s important to really contemplate whether or not you need it.

After all, carrying Uninsured Motorist Protection raises your rates but it benefits you.

Uninsured Motorist Protection, also known as UM, is a first-party coverage option that will cover your medical bills and other related expenses incurred after you’re injured by an uninsured driver.

You could be doing any of the following:

  • walking
  • riding a bike
  • driving a scooter
  • driving your car,
  • sitting as a passenger in a bus

No matter where you are, if a driver without insurance hits you and you or a household family member are injured, your coverage will pay.

What is the benefit of carrying Medical Payments coverage?

Medical Payments is a lot like Uninsured Motorist Protection. It is also a first-party coverage option that most states say must be offered to applicants. Unlike UM, you don’t have to be hit by an uninsured driver for Medical Payments to pay.

This is a no-fault type of coverage that will pay for reasonable medical expenses that you are billed for after any type of auto accident, regardless of who is at fault. Since fault doesn’t matter, it’s wise to carry Medical Payments.

You need the coverage if you’re living without insurance or you have a deductible that you can’t afford to pay.

Personal Injury Protection, also known as PIP, is another first-party coverage option, but the benefit works differently than others. PIP is required in no-fault states where drivers use their own insurance to pay for medical bills after an accident.

The benefit will pay for not just your medical bills, it will also pay for other expenses like:

  • Funeral expenses
  • Continual care from a doctor
  • Chiropractic care
  • Services needed to care for yourself while you’re recovering from the accident
  • Loss of income and disability

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How does carrying full coverage benefit you?

Full coverage is a term that’s thrown around quite a bit in the industry. Many people assume that having full coverage means that they are covered for everything.

While policies that are labeled this way provide more protection than basic policies, there are still some gaps in coverage you should know about.

Typically, a full coverage policy includes comprehensive and collision coverage. Each of these pays for the repairs needed or the replacement of a car after an accident or a loss that results in damage.

The great thing about having comprehensive and collision is that a car theft, a vandalism, a hail storm, or an accident won’t leave you carless.

While your coverage won’t guarantee that your car will be fully replaced, you will only be on the line for paying your deductible. You will get a check to pay for the repairs or for the Actual Cash Value of the car.

The best thing is that your adjuster will handle the claim with the other claims department for you to make the transaction less stressful.

Additional Coverage for Towing and Rentals

Many companies offer rental reimbursement coverage and towing coverage for a small charge each term. If you want to get a rental after a loss, you can avoid the expense and file a claim on your insurance by electing to carry your own rental car coverage.

Towing can be a lifesaver if your car breaks down and you don’t have other coverage.

Insurance policies provide you with endless benefits, some that you aren’t even aware of. Be sure to consider the benefits when you’re building a policy to get car insurance quotes. Try out quotes for several limits and combinations to see what you can afford.

By comparing rates online, you can save time and money. Get started right now by entering your zip code below!