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Customized Auto Insurance Policies

An auto insurance policy comprises an ensemble of auto insurance products, each of which is designed to cover a different area of risk. While most states require their licensed drivers to purchase certain car insurance products at specific liability limits, there is a host of other coverages that customers can buy voluntarily to further protect themselves.

This article will tell you everything you need to know about tailoring your insurance to fit your particular car and circumstances. Overall, there are many modifications you can make to personalize any insurance policy. Do you have a hot rod or another collectible auto that needs specialized insurance? Scroll down now to learn how to customize an auto insurance policy.

Customize Your State-Mandated Car Insurance

If you are a licensed motorist and live in any state except Virginia and New Hampshire, you are required by law to purchase liability auto insurance for bodily injury and property damage. (Liability insurance protects other people and their property if you should cause an accident that results in injury or property damage.) For example, here are North Dakota's mandated minimum liability coverages and their state-mandated liability limits (in parentheses):

  • Bodily injury per person ($25,000)

  • Bodily injury per accident ($50,000)

  • Property damage ($25,000)

Nationwide, every state except Virginia and New Hampshire requires these three basic types of insurance products, though often with different liability limits. However, some states require not only liability insurance but also uninsured/underinsured motorist coverage, personal injury protection or another kind of medical coverage, also at specific liability limits. Unlike liability coverage, these types of insurance are designed to protect you, not other drivers.

Unlike optional coverages, the only way you can customize the required minimum insurance is by raising the state-mandated liability limits—that is, the dollar amounts up to which a policy will pay for a loss. For example, while a North Dakota driver must purchase bodily injury coverage per person for at least $25,000, that driver can elect to increase the liability limit to, say, $50,000. When your liability insurance runs out, you're on the hook for the rest of the money unless you buy umbrella insurance.

You can also buy add-on insurance like collision and comprehensive. Keep reading to learn about add-on coverage options.

Customize Your Add-on Insurance

Unless you purchase your state's mandated minimum insurance package, you cannot drive legally, making yourself vulnerable to tickets, fines, fees, penalties, punishments, bankruptcy and imprisonment. But once you have the state-mandated minimum insurance, you are free and clear to create your own ensemble of insurance products.

Each of these add-on products, or "endorsements," offers auto insurance coverage for certain areas of risk. In other words, you can choose whatever coverage options make the most sense for you, your family, your lifestyle and your budget.

Popular Add-on Car Insurance Products

Most consumers need add-on insurance for just the right mix of insurance products.

While comprehensive and collision (together, called "full coverage" insurance) are not required in any state, the latter two types of insurance—personal injury protection (PIP)/medical payments coverage and uninsured/underinsured motorist insurance—listed in this section are required by some states but not by others. If they are not required by law, they are an add-on, or optional, insurance.

Comprehensive Coverage

This coverage underwrites passive damage to your vehicle, such as damage caused by hail, a falling tree or mob violence. If you have an especially coveted ride—a hot rod, a vintage roadster—you should seriously consider comprehensive coverage: It is the only kind of vehicle insurance that pays for your car getting stolen. This insurance policy type has a deductible. Click on the link for more information!

Collision Coverage

You can customize your auto insurance, but some things are non-negotiable.

This coverage underwrites active damage to your vehicle, such as when your ride smashes into another automobile, a fence or (perish the thought) a person. This type of auto policy is subject to a deductible. You can customize your plan by choosing a high or a low deductible. A higher deductible will mean lower premiums but you'll be expected to pay that much towards your own damages.

Personal injury Protection (PIP)/Medical Payments Coverage

Also known as "no-fault" insurance, PIP helps to cover your and your passengers' health expenses after an accident, no matter who caused the collision event. Also known as "MedPay," medical payments coverage helps pay for medical expenses after a car accident as well as EMT and ambulance fees, nursing services, doctor visits, X-rays and more. Before you decide on one or the other, ask your licensed agent about the policy provisions of each and any policy modifications you're allowed to make according to state law.

Uninsured/Underinsured Motor Vehicle

This coverage pays for medical expenses and property damage that result from an accident caused by a motorist who has zero liability insurance or a motorist whose liability insurance does not cover the full amount of your claim. When you consider that one in eight drivers don't have any liability insurance, this type of policy makes a lot of sense. Click on the link for more information!

Lease/Loan Gap Coverage

Gap insurance protects you if your car is declared a total loss and you owe more on the car than its covered depreciated vehicle value. Click on the link for more information!

Rideshare Driver Coverage

If you drive for a Uber, Lyft or another rideshare company, only rideshare insurance protects you during that period of time when you're not covered by either your personal auto insurance or your rideshare company's insurance.

Accident Forgiveness

If a motorist has filed no car insurance claims, this kind of car insurance policy doesn't hike your car insurance rate for your first accident. Not every car insurance company offers this kind of car insurance policy.

These discounts can really add up to lower your rate. According to SmartFinancial, here are some quick statistics:

  • Nationwide average cost of per-year car insurance: $1,450.92

  • Nationwide average cost of per-year minimum coverage: $730

  • Nationwide average cost of per-year full coverage: $2,400

More Add-on Products

Insurance coverage serves many purposes. All auto policies are different because every individual is different. When you're looking for auto insurance quotes and asking a lot of questions, be sure to ask about these types of optional auto insurance coverage, which are available nationwide:

New Car Replacement

Roadside Assistance

Towing and Labor Coverage

Rental Car Coverage

Original Parts Replacement

Major Parts Replacement Coverage

Unlike original parts replacement, this product does not guarantee that your damaged vehicle will be restored using the manufacturer's original parts. However, major parts replacement insurance will replace major tires, brakes and batteries, regardless of wear-and-tear and depreciation value at the time of the accident.

See Personalized Car Insurance Quotes

Customize Your Deductible

According to the International Risk Management Institute, a deductible is "an amount the insurer will deduct from the loss before paying up to [an insurance product's] policy limits." In other words, a deductible is an agreed-upon payment amount you pay out of pocket before your coverage kicks in with your add-on coverages.

Interestingly, a deductible is paid only for collision or comprehensive claims, not liability claims. So, if you have a $250 deductible and a falling tree causes $1,000 worth of damage to your auto, you'll pay $250 to the repair shop, and then your comprehensive coverage will pay the remaining $750.

You will be asked to quote your deductible amount when you are signing up for an auto policy. These amounts range from $250 to $1,000 or more. In short, the higher the deductible you choose, the lower your premium.

Best Way to Find Cheap Insurance

The best way to find the best, cheapest car insurance is to shop around. You can do it for free by entering your zip code on this page. Remember, there are many, many car insurance coverage options out there, so you can always make modifications to your various coverages to get a better car insurance quote.

Customize Your Driver Discounts

All insurance companies offer discounts, which serve to reduce the amount of your auto insurance bill. While most companies limit the number of discounts you can purchase, you probably won't be eligible for every discount. When you comparison shop auto insurance quotes, be sure to ask about the following discounts:

  • Bundling your auto and home coverage with the same company

  • Bundling coverage for two or more vehicles with the same company

  • New car

  • Antitheft devices

  • Students away from home

  • Good grades

  • Classes for defensive driving and drivers ed

  • Good credit

  • Low mileage

  • Longtime customer

  • Clean driving record (no accidents or moving violations in three years)

  • Paperless or automatic bill payment

  • Alumni or professional affiliations

These are just a few examples of the most popular discounts. Want to know more? SmartFinancial.com features many articles that have up-to-date information on auto discounts and other ways to save on your insurance bill.

Customize Your Collectible Car Insurance

While American Family, Liberty Mutual, State Farm and other major auto insurers offer special underwriting for collectible cars, a few boutique carriers are entirely devoted to this area: The Hagerty Group LLC, Heacock Classic, Grundy Insurance and American Collectors Insurance, among others.

A few boutique carriers specialize in coverage for classic cars.

Some of these insurers cover more than just classic cars, however. For example, Hagerty, whose policies are underwritten by the Essentia Insurance Company, covers not only vintage cars but many other collectibles: cars with extensive modifications, high-performance race cars, trucks, military vehicles, retired commercial vehicles, boats, motorcycles and even tractors.

While this type of insurance automatically covers liability, it also typically covers specialized towing, spare parts, repair and restoration that are specific to a unique car. Of course, you'll probably want to add full coverage—that is, comprehensive and collision—to protect your baby in the event it gets dinged, damaged or destroyed.

The price of insuring a collectible auto is much lower because you drive it much less often. For example, Hagerty claims its insurance policy premiums are "up to 34% lower on average than daily driver insurance" and promises an average savings of up to $244 over traditional auto insurance. However, the price depends on the carrier, the car, the driver and the driver's residence, among other factors.

Is My Auto Eligible for Collectible Car Insurance?

While it's difficult to give a one-size-fits-all description of a collectible car, the car in question should probably be at least 25 years old and appreciating in value, making it worth more than when you first bought it. To qualify for this type of insurance, your ride will have to meet some or all of the following conditions:

  • Low mileage per year

  • Not your primary vehicle used for commuting and everyday purposes

  • Properly secured at all times, whether in a private garage or storage unit

  • Not damaged in any way

  • Generally in good working condition with proof of regular maintenance

  • Safe to drive

  • Not designed for mainly off-road use

The limited-use clause of your policy will allow you to drive to car shows and meet-ups, but you should ask an agent about your policy's travel restrictions.

Are Hot Rods and Custom Cars Eligible?

If you have a hot rod that has vehicle modifications, aftermarket parts, unique accessories, and a cool paint job, you can probably get it insured as a specialty car, even if it is less than 25 years old. (Unique, value-added rides that are less than 15 years old are classified as "exotic," not "classic.") You'll probably want to get some comprehensive insurance, just in case some enterprising citizen decides to snatch your hot rod.

Steps To Take When Insuring a Collectible Car

You and your insurance company will have to agree on the value of your rare automobile. While you can access Collector Car Market Review (CollectorCarMarket.com), CaaarGuide (CaarGuide.com) (CaaarGuide's website), ClassicCarValue.com (American Collector's appraisal tool) or, say, the National Automobile Dealers Association to get an estimate of your ride's value, ideally an expert should do an in-person appraisal of your ride's value.

Your insurance company will specify this value on your declarations page—a summation of your coverage and usually the first page of your car insurance policy. Typically, your insurer will underwrite your risk up to that value without depreciation. If your sweet, sweet ride appreciates in value, you should talk to your insurer about adjusting your coverage.

In this specialized market, most carriers offer specialized towing and spare parts as well as specialized repair and restoration coverage. Before you sign on the dotted line, it's always important to iron out the details of what the policy will cover and what it won't cover, from the frame (chassis), the body (sometimes called "the cage") to hard-to-find parts, rims and the paint job.

It's also good to ask if you have your choice of repair shop. You should be able to take your classic model to a specialist, even if the bill will be double the cost of a standard repair shop's. If you use special tools to maintain your ride, some companies offer equipment coverage.

SmartFinancial Customizes Car Insurance Quotes

Whether you are a student with a station wagon in a high-risk zip code or a retiree with a hot rod in a low-risk zip code, you want to snag the best-value car insurance you can get. When you enter your zip code on this page or call 855-214-2291, an expert SmartFinancial agent will help you to decide on a mix of policies and answer any questions you may have at no cost.

SmartFinancial will help you to tailor your vehicle insurance to meet your specific needs. Using artificial intelligence and machine learning, SmartFinancial's cutting-edge algorithms can sift through all the auto policies in your area to find the right auto insurer with the right auto policy with the right car insurance quote for you.

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