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.
Vehicle Liability Insurance
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 drive 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, it 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).
Where to Shop for Coverage
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.
*Not all products, coverages and discounts are available in every state. Restrictions, exclusions, limits and conditions apply.
Insurance products are offered by PSECU Protect, LLC an affiliate of Pennsylvania State Employees Credit Union (PSECU). Available insurance products are not deposits of Pennsylvania State Employees Credit Union and are not protected by any type of deposit insurance, are not obligations of or guaranteed by Pennsylvania State Employees Credit Union or its affiliates, and may be subject to risk. Insurance products are not insured or guaranteed by the National Credit Union Administration (NCUA) or any other agency of the United States. Any insurance required as a condition of the extension of credit by Pennsylvania State Employees Credit Union need not be purchased from our Agency, PSECU Protect, LLC, but may, without affecting the approval of the application for an extension of credit, be purchased from an agent or insurance company of the customer's choice.
The content provided in this publication is for informational purposes only. Nothing stated is to be construed as financial or legal advice. Some products not offered by PSECU. PSECU does not endorse any third parties, including, but not limited to, referenced individuals, companies, organizations, products, blogs, or websites. PSECU does not warrant any advice provided by third parties. PSECU does not guarantee the accuracy or completeness of the information provided by third parties. PSECU recommends that you seek the advice of a qualified financial, tax, legal, or other professional if you have questions.