Pothole- and Flood-Caused Damages Covered Under Optional Portions of Auto Policy

Auto Policyholders Have Options For Dealing With Winter's Aftermath

NEW YORK, April 8 /PRNewswire-USNewswire/ -- Drivers whose automobiles are damaged after their vehicle strikes a pothole or gets caught in floodwaters can file a claim with their auto insurer, so long as they have collision and comprehensive coverage, according to the Insurance Information Institute (I.I.I.)

"The collision and comprehensive provisions of an auto insurance policy are optional and increase the cost of insuring a car. But those additional premium dollars pay big dividends when a pothole wreaks havoc on your car's undercarriage or a flash flood soaks your vehicle's interior," said Michael Barry, vice president, media relations, I.I.I.

Seventy-two percent of insured drivers purchase collision coverage and 76 percent buy comprehensive coverage on top of their liability coverage, based on 2007 data compiled by the National Association of Insurance Commissioners (NAIC).

"You don't need either collision or comprehensive coverage to drive legally, but both provide important financial protections and they might be required if you financed the purchase of the car through a bank or another financial institution," Barry added.

Almost every state requires you to buy a minimum amount of liability coverage. Chances are that you will need more liability insurance than the state requires because accidents often cost more than the minimum limits. In today's litigious society, buying only the minimum amount of liability means you are likely to pay more out-of-pocket -- and those costs may be steep. The insurance industry and consumer groups generally recommend a minimum of $100,000 of bodily injury protection per person and $300,000 per accident.

In addition to liability coverage, drivers should also consider buying collision and comprehensive coverage when purchasing an auto insurance policy. Following is a quick primer on each optional coverage:

• Collision coverage reimburses you for damages to your vehicle caused by potholes. It also pays for damage to your car resulting from a collision with another car, object or as a result of flipping over. Even if you are at fault for an accident, your collision coverage will reimburse you for the costs of repairing your car, minus the deductible. If you're not at fault, your insurance company may try to recover the amount it paid you from the other driver's insurance company. If your insurance company is successful in this regard, you'll also be reimbursed for the deductible you paid your insurer. Collision coverage is generally sold with a deductible of $250 to $1,000 -- the higher your deductible, the lower your premium.
• Comprehensive coverage generally covers you for damages caused by something other than a collision with another car, although potholes are an exception.  It reimburses you for vehicle losses incurred by floods as well as perils such as fire, vandalism and windstorms. Even damages to your car that are caused by earthquakes, falling objects (e.g., trees), an explosion, hail and riots are covered under comprehensive policies. In addition, if your car is damaged as the result of a collision with an animal, such as a deer, comprehensive coverage also kicks in. Some companies offer glass coverage as part of their comprehensive package and will repair or replace a cracked or shattered windshield. Some insurers have separate glass coverage, which can be purchased with, or without, a deductible. So check with your insurer. Comprehensive insurance is usually sold with a deductible ranging from $100 to $300.  

Despite the economic advantages offered by auto insurance policies with collision and/or comprehensive coverage, purchasing both might not be a prudent expense for the owners of older cars. Review your coverage at renewal time to make sure your insurance needs haven't changed. Auto dealers can tell you the market value of your vehicle. Or you can look it up online at Web sites such as Kelley Blue Book

For additional information on auto insurance premium trends, log onto the I.I.I.'s Facts and Statistics section. The I.I.I. also has a section on its Web site offering the Consumer Basics on purchasing auto insurance.

FOR MORE INFORMATION ABOUT INSURANCE: www.iii.org

SOURCE Insurance Information Institute

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