For most people, owning a vehicle isn’t a luxury – it’s a must-have for both work and play. You know what else is a must-have? The proper insurance coverages. Not only is it the law, but insurance also protects you from the potential of huge financial losses if you’re at fault in an accident that results in injuries or deaths.
In this post, we’ll cover the four most common auto insurance coverages: vehicle liability, collision, comprehensive, and GAP. As you’ll see, you don’t need every type of insurance, with the exception of liability. Liability insurance is required by the state of Pennsylvania, so we’ll start there.
In Pennsylvania, all drivers are required to carry vehicle liability insurance. It covers any property damage or injuries you may cause as a result of an accident. You’ll need to have state-required minimum coverage on any car, motorcycle, truck, van, or RV you own. In Pennsylvania, those minimums are:
$15,000 for injury or death of one person in an accident
$30,000 for injury or death of more than one person in an accident
$5,000 for damage to property of another person
You may choose to go higher on any or all of these. You’ll want to discuss options with your insurance agent.
Collision is optional coverage if you own your vehicle outright. If you have a loan or you’re leasing, coverage will be mandatory. That’s because your lender or lease company has a vested interest in the vehicle, and collision insurance pays to repair or replace your vehicle – minus your policy’s deductible.
With respect to which vehicles are covered, “your” is the operative word. Collision insurance is designed for damage done to your vehicle. Scenarios include hit-and-run accidents where the other driver flees the scene, when you crash into another vehicle, or when you hit a stationary object like a guardrail, tree, or pole. Collision doesn’t cover weather damage or damage to another driver’s vehicle. For those situations, you’d want to have the next type of insurance we’ll cover – comprehensive.
It’s a bit of a misnomer because although it sounds like it includes every situation, comprehensive (aka comp) insurance only covers damage to your vehicle caused by a specific set of circumstances. They are: theft and vandalism; hitting an animal running into the road; damage caused by tornado, hail, and floods; and damage from falling objects, like tree branches. The insurance you purchase, minus the deductible, will pay for either repairs or the value of the vehicle if it is totaled.
Like collision insurance, comp coverage may be required by your lender or lease company. If you own your vehicle outright and it has lost a significant amount of its value, you may decide that you won’t get more benefit for what you’ll pay in insurance premiums. Of course, as with any type of insurance, you can lower your premiums by agreeing to a higher deductible, but in the end, it might be best for your wallet to skip comp insurance, especially with older vehicles.
GAP stands for guaranteed asset protection, so this type of insurance helps to close the “gap” between your loan balance and the actual cash value of your car if it’s totaled. Collision or comprehensive insurances only pay the value of vehicle. They do not pay for what you owe on the car loan (or lease).
Like so many other types of insurance, there isn’t a one-size-fits-all solution. You’ll want to find an insurance agent you trust to help you get the right coverage for your situation. Friends and family members are good sources for recommendations. PSECU members have another option – PSECU Protect, LLC. They provide a variety of coverages, including auto. Not a member? It’s easy to join and get in on all the perks we offer. Visit psecu.com/join today.