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Navigating Through Auto Insurance Components

March 30, 2020

Do you find the details of auto insurance coverage confusing? You aren’t alone. In fact, each policy and company may offer slightly different coverage.

Do you find the details of auto insurance coverage confusing? You aren’t alone. In fact, each policy and company may offer slightly different coverage. We’re here to help you understand the basics of each type of coverage.

Auto insurance policies provide financial protection for incidents, accidents, and injuries to people and property involving the insured vehicle. However, the details of the coverage differ based on the specific components of your policy. Just because you have car insurance doesn’t necessarily mean you have the coverage you need.

The Components of Auto Insurance Policies

State laws and lender agreements dictate your required auto insurance coverage. Based on how you use the vehicle, you may need additional coverage, like coverage required for rideshare drivers. Here, we cover the three main types of auto insurance coverage, all of which you may need for your vehicle.

Liability Coverage

Liability coverage is the most basic auto insurance coverage required by law in most states. This is barebones coverage. It’s also the least expensive option to meet the minimum requirements to drive legally.

Liability coverage only pays for your liability to the other party involved in a crash or incident that is your fault. This insurance covers the property and medical costs you owe the other party,  along with amounts for pain, suffering and disability that are due to a bodily injury that results from an accident. Your personal medical costs and your vehicle repairs or replacement are not covered with a liability-only policy.

Collision Coverage

As the name indicates, collision coverage provides accident protection for damage to your vehicle caused by a collision. In other words, if you crash into an object or another vehicle, collision coverage pays for repairs or replacement of your vehicle. Like comprehensive coverage, the payment to repair or replace your vehicle under collision insurance coverage after an accident is reduced by a deductible selected by you.

If you finance your vehicle, most lenders require you to buy collision coverage as part of the lending agreement.  These lenders are also called lienholders, and if a lienholder is listed on the policy they may receive notice from your insurance company if your insurance company cancels your policy.

Comprehensive Coverage

Comprehensive coverage provides protection for damage to your insured vehicle that is not the result of a collision, including fire, flood, hail and vandalism, and for theft of your insured vehicle. Each policy identifies the specific losses covered.  

Most policies cover for repairs or replacement up to the cash value of the vehicle. The payment to repair or replace your vehicle under comprehensive insurance coverage after a loss is reduced by a deductible selected by you.  The higher the deductible, the lower the cost for purchasing this coverage. If you finance your vehicle, most lenders require you to buy comprehensive coverage as part of the lending agreement.

Additional Auto Insurance Components & Coverages

Many insurance companies, but not all, offer optional coverages in addition to the fundamental coverage options. These add-ons increase the cost of the insurance but may offer conveniences someone might want to spend the money on when offered.  An example is Rental Car coverage, which is a common personal auto policy option but not as common to commercial insurance policies. If offered and purchased, this would pay some of the cost of renting a temporary replacement car in the event the insured vehicle is being serviced or repaired after an accident. Most basic policies do not cover the cost of rental cars while your vehicle is in the shop.

Uninsured or Underinsured Motorist Coverage

Not everyone on the road follows the law. This means some people drive while uninsured or underinsured. If you are in an accident caused by a driver who does not have insurance (an uninsured motorist) or does not have enough insurance to pay for the bodily injuries caused in an accident (an underinsured motorist) this insurance will protect you and the persons in your vehicle, up to the limit of liability you purchased (subject to some reductions and limitations).

Uninsured and underinsured motorist coverage usually covers bodily injury (including unpaid medical expenses), and in some states may include protection for property damage. This coverage varies from state-to-state. When a rideshare driver purchases Uninsured Motorist Coverage or Underinsured Motorist Coverage they are protecting themselves and their riders.

Medical Payments Coverage

Basic auto insurance policies don’t always cover medical expenses. This is optional coverage.  With a Medical Payments Coverage add-on, you may receive payment for your medical expenses resulting from treatment of a bodily injury sustained in an accident involving the insured vehicle. If you have Medical Payments Coverage in addition to your required Liability insurance, you will have protection from your personal financial responsibility for your medical expenses.

Commercial Coverage or Rideshare Coverage

Some insurance companies only sell personal insurance. Some insurance companies only sell commercial insurance. Some companies sell both, but personal insurance and commercial insurance are separate insurance policies for which separate premiums are charged. Commercial insurance is sold to businesses, and applies to vehicles used for business. However, commercial policies are usually very pricey. Commercial auto insurance policies aren’t really designed for freelance or contract work. For rideshare drivers, commercial policies provide the right coverage but not at the right price. This is why Buckle is different - we offer one affordable rideshare insurance policy for both personal and commercial auto insurance.

As a rideshare driver, your needs for insurance coverage are complicated. You need coverage for your personal use and you need coverage for your rideshare use. Rideshare is a commercial use excluded by most personal insurance policies. If you buy a rideshare add-on endorsement from your personal insurer, it does not extend all of your coverage to your rideshare use and it does not apply all of the time. The personal auto rideshare endorsements leave gaps in coverage that most rideshare drivers don’t understand because the personal auto insurers don’t explain it to them. For example, you may have no coverage while parked or waiting for a rider, or if your personal auto insurer charged for a rideshare endorsement, it may only provide Liability Coverage, and then only before you accept a rider dispatch, at which time all of the coverage from the personal auto is excluded, leaving you only with the Liability coverage from the rideshare company.    

Buckle rideshare insurance offers an innovative alternative that wraps all of the coverage you buy, so it applies all of the time, for your personal use and your rideshare use, and applies even when the Liability coverage from the rideshare company also applies. Our gig insurance protects drivers for both personal and rideshare or delivery driving under one policy 24/7. For specific details on what Buckle will cover, check out our Buckle Rideshare Insurance Coverages and Delivery Driver Insurance pages for more information.

Get the Coverage You Need with Buckle

Buckle is an auto insurance company built specifically for rideshare drivers and delivery drivers. We believe gig drivers deserve to have protection in this new gig economy. Instead of credit scores, we use your driver ratings to set your insurance rates. The better you drive the more you save.

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