Juan Carlos Rodriguez Professor Cozza Managing Insurance Group 8 Client 1. Stewart, Rios, Rodriguez April 1, 2022 Auto Insurance Recommendation Clients Brittany and Michael Jones, currently own an Audi A3 valued at $45,000 and a used car valued at $20,000. After consulting with our clients about leasing the BMW X5 instead of outright buying it, we believe that the Jones should consider getting a full coverage car insurance policy for all their autos. This policy should be comprised of Bodily Injury Liability, Property Damage Liability, Personal Injury Protection, Uninsured & Underinsured Motorist Coverage, Collison Coverage and/or Comprehensive Coverage. While some states in the US require these types of coverages, some maybe be optional. For a full coverage policy, the average premium is $1,724 per year, this number does vary by state though. Bodily Injury liability insurance covers cost of other drivers’ injuries if you are at fault for the accident. This protects you against the injured party’s expense claims after the accident such as medical bills, lost wages, and legal fees related to the injuries. Coverage limits vary by state, but it’s recommended that they purchase the highest bodily injury liability coverage they can possibly afford. If an accident does occur and they are at fault, not having enough coverage to pay all injury related costs may leave them vulnerable to lawsuits and puts their financial assets at risk such as their house or bank accounts. Property Damage Liability insurance covers damage you cause to someone else’s property with your vehicle. While this insurance covers damages you caused to another person’s car, it can also cover damages to a home, buildings, or telephone poles. These liability coverages are sold by considering three different liability cases into account: the maximum amount you will need to cover a single person’s injuries, the maximum amount you will need to cover multiple people’s injuries, and the maximum amount you will need to cover the total amount of property damage in an accident. To be fully protected, $100,000 per person, $300,000 per accident in bodily injury liability and $100,000 in property damage liability coverage is what we recommend. Personal Injury Protection (PIP) or “No-Fault Insurance” covers cost if you or your passengers are injured in an accident even if you were not there at the time of the accident. This covers medical bills, lost wages, death benefits, and funeral expenses. Personal injury protection may not be as important than other types of auto insurance though because it covers some of the same things as health insurance plan would cover regularly. PIP insurance is only required in 16 no fault states (New Jersey is one of them) and there are 6 additional states that offer this coverage as optional. In a no-fault state, each driver’s insurance covers their own injuries and expenses after a car accident regardless of who was at fault. In an at-fault state, the driver who is responsible for the damage is required to pay for the damage, whether it be through their car insurance or out of pocket in some cases. Coverage required varies by no fault states, but using New Jersey as an example, the minimum is about $15,000 per accident. Uninsured motorist insurance and underinsured motorist coverage protects you if you are in an accident with uninsured driver or with a driver whose insurance does not cover the damage they have caused entirely. The Jones should really consider getting this coverage especially since they want to lease the BMW X5 and is required by most dealerships. In some states this is required by law to have and typically mandate minimums of at least $25,000 per person and $50,000 per accident (New Jersey is also one of those states.) Collision and Comprehensive Coverage are two coverage that go hand in hand. Collision coverage covers damage to your car after a collision with another car or an object, regardless of who was at fault at the time of accident. This type of coverage is also required if you are leasing or financing a car, so the Jones will need this if they decide to lease the BMW X5. Usually, collision insurance has a maximum limit of liability that is paid. A deductible must also be paid before this coverage can take effect; this amount could be set at $500 or $1000 depending on how much the Jones decide on paying out of pocket per claim they make. Comprehensive coverage pays to repair or replace your car if it is damaged or destroyed if isn’t a collision accident. This includes natural disasters, falling objects, animal damage, theft, and vandalism. Comprehensive insurance will also pay for the actual cash value of your car at the time of the accident if it is totaled. This coverage also has a deductible like collision coverage of the same amounts. The Jones should keep in mind that the lower the deductible they have, the higher their premium cost will be and the higher the deductible, the lower the premium cost will be. We recommend having both to be fully protected and if needed, the Jones can set the deductibles to different amounts based on what coverage they feel like they’ll need more.
