Umbrella insurance is the ultimate car insurance protection you can have.

Umbrella insurance protects you from the financial storm after a car accident.

Not all drivers are looking for the cheapest policy they can get their hands on that will allow them to drive. Many drivers want the most coverage possible to make sure they are fully protected from even the worst car accident’s aftermath.

For this protection, you need to ask your insurance agent or insurance company about adding umbrella insurance to your existing car insurance policy.

What Is Umbrella Insurance?

Umbrella insurance is usually known as a personal umbrella policy and it does exactly what it sounds like it does. Just like how you use an umbrella above you to protect you from the rain or snow, a personal umbrella policy is placed above your home or auto insurance to protect you from financial ruin.

Umbrella insurance only extends over your liability insurance also, so if your liability coverage isn’t enough to cover the damages or medical expenses of the other person you hit in an accident your umbrella insurance kicks in right where the your liability coverage ends. In other words, umbrella insurance is extra insurance coverage that goes above and beyond what is offered with a regular car insurance policy.

How Exactly Does Umbrella Insurance Work?

Here is an example of how umbrella insurance works:

Say that you cause a car accident that injures another driver. Your regular car insurance has a liability limit of $250,000 to cover medical expenses, but once it hits this limit your insurance company will no longer pay for anything else. So what happens if that limit is not enough to cover the other driver’s needs?

If the other driver’s injuries are bad enough, they may require more than the $250,000 that your policy covers. If that happens, you are responsible for paying the rest of it out of your own pocket and if you can’t they can sue you. If they do, your personal assets would be at stake.

An umbrella policy can cover the additional costs when your insurance isn’t enough. So if you are found to be responsible for $400,000 in medical expenses and other costs and your car insurance only covers $250,000 of that, your umbrella policy will cover the remaining $150,000. For more information contact your car insurance agent or car insurance company on more information on the umbrella policies they offer.

Cheap car insurance may be good, but only in the short term.

We have all seen those commercials, the ones that promise that you will only pay $39 a month for your car insurance. Sounds great doesn’t it?

A little too great.

That $39 cheap car insurance is just so you can drive and not get in trouble with your state’s DMV. Unfortunately, it doesn’t really offer any protection for you if you were to cause an accident or get into an accident with another that doesn’t have car insurance.

What Cheap Car Insurance Covers

This cheap car insurance, in most cases, is basic liability coverage. Basic liability coverage consists of:

• Property damage liability coverage: coverage that will pay for any damages you cause with your vehicle to another person’s vehicle or property.
• Bodily injury liability coverage: coverage that will pay for medical expenses that you cause with your vehicle to another person or their passengers.

Not only will this cheap car insurance only cover the bare minimum of the coverages that you are required to have, but it will also only cover at the absolute lowest amount of coverage you are required to have.

What Cheap Car Insurance Does Not Cover

The cheap car insurance that you see advertised on TV does not cover the following:

• Damages to your vehicle
• Medical expenses from injuries to you or your passengers
• A rental car
• Towing
• Coverage to your vehicle if you are hit by someone without insurance (uninsured motorist property damage)
• Medical expenses from injuries to you or your passengers if you are hit by someone without insurance (uninsured motorist bodily injury)

Why Cheap Car Insurance is Not a Good Thing

In addition to all of the stuff that it doesn’t pay for above, this cheap car insurance that you will be paying for to protect you actually offers hardly any protection at all. For example, say you purchase your cheap car insurance and you live in a state where the bare minimum is $10,000 is coverage for bodily injury liability coverage per person, $15,000 bodily injury coverage per accident and $10,000 is coverage for property damage liability coverage.

This may look like a lot of coverage, but it is really not. If you cause a car accident that has injuries involved then the most your policy is going to pay the other person to cover their medical expenses is $10,000. We all know how fast medical bills add up and this is going to barely be enough to cover most car accident injuries, let alone major car accident injuries.

Which means that you will have to pay for any medical expenses beyond your $10,000 coverage out of your own pocket.

As for hitting another person’s car, you would also only have $10,000 there too.  So if the vehicle you hit was determined to be a total loss, how many vehicles do you know of out there that only cost $10,000? If it was determined that you owed the other person $20,000 to replace their vehicle, than your insurance would pay $10,000 of it and you would have to pay the other $10,000 out of your own pocket.

In the end, paying a little bit more a month for better car insurance coverage ends up being a lot less costly than having to pay for a car accident out of your own pocket.

How is having no driver to rate going to change car insurance policies?

“Most accidents are caused by human error so if this factor can be minimized by taking control of the moving vehicle away from the driver, the accident rate should tumble. Data from the Institute for Highway Safety (IIHS) and Highway Loss Data Institute (HLDI) already show a reduction in property damage liability and collision claims for cars equipped with forward-collision warning systems, especially those with automatic braking. The exact percentage varied depending on the car manufacturer.” ~Insurance Information Institute

This is excellent news for all of us drivers on the road.  However, may not be such good news for car insurance companies.

Driverless Cars Are Coming

So we have started hearing more and more about them, but when are we going to actually start seeing these automated cars on the road? Well, we could start seeing the first automated ones by the year 2020.

So far we are already seeing cars that help us drive a lot safer because they are equipped with collision avoidance warning, blind-spot monitoring and lane departure warnings. There are also models coming out soon that will allow you to switch to driverless cruise control on the highways. So slowly we are getting there.

How This Affects Car Insurance

Having cars that decrease the number of accidents each year will be something that both drivers and car insurance companies are going to love at first. The car insurance companies are going to love it because they will still be bringing in premiums and now paying out less in claims, meaning a nice profit for them for the first handful of years. However, as the years go by drivers are going to have fewer and fewer car accidents on their records, which means a decrease in car insurance premiums and less revenue for the insurance companies.

Which also brings out the question of how insurance companies are going to rate car insurance policies, if the car is driving and not a human. If the vehicle is driving itself and gets into a car accident, that is going to be the fault of the company that made the vehicle, not the person sitting in the driver’s seat.

It could be that car insurance will eventually switch from us drivers being required to purchase it to be able to drive to car companies being required to purchase it to be able to sell their vehicles.

Getting around car insurance rate increases.

That dreaded letter has finally arrived in your mailbox, the one advising you that your car insurance rates have just increased. The worse part of it is, is that you don’t remember doing anything since the last renewal to cause your insurance rates to increase.

If you can’t find resolution with your insurance company as to the reason behind the increase or to correct an erred increase, here are some ways to get your car insurance rates back to a better level.

Shop for Better Car Insurance Rates

It’s good to shop around for car insurance on a regular basis anyway, but it is an especially good time to shop around when you have just received a car insurance rate increase. When you start, make sure you have your current declaration page in front of you. The one that you just received in the mail that shows your rate increase.

You will need to keep this in front of you so that you know what coverages to get quotes on and how much the price is for each coverage. This is the only way you will be able to accurately compare the rates between car insurance companies.

Cut Coverages for Lower Car Insurance Rates

Another good way to cut your car insurance rates is to decrease your coverage. You can do this by increasing the deductibles on your collision and comprehensive coverages, removing rental car coverage, towing coverage or any other coverages you have that you can get cheaper elsewhere or can pay for out of pocket.

Lower Car Insurance Rates with a Discount Review

When you contact your car insurance company about your increase, you also need to have them check to make sure that you are getting all of the discounts that you quality for. Some of the discounts that were missed could save you quite a bit of money. These include discounts like driver’s safety courses, good student discounts and anti-theft devices.

Most of the discounts that get missed are the ones that can’t be looked up automatically by the insurance company’s data base. So have the agent or customer service rep you are talking to take a look through your policy to see if there is anything they can add to help you lower your car insurance rate.

Car insurance myths can cause a lot of questions.

The confusing car insurance industry is ripe for myths to be created.

Car insurance is one of those life topics that most everyone is confused about. The only ones that seem to understand it are usually the ones that work in the insurance industry.

And when something is confusing, people usually start to make things up to help them understand it better. This is where insurance myths come from.

Car Insurance Myth 1: State Minimums Protect Your Car

The state minimum car insurance is usually just liability insurance in most states, which is the coverage that pays if you hurt someone or damage their property. It does not cover damages to your own vehicle.

If you want to fully protect your vehicle for all types of damage, you need to purchase both collision and comprehensive coverage. Collision coverage will pay for the damages to your vehicle from an accident and comprehensive will pay for all of the other things that can damage your car that is not a collision.

Car Insurance Myth 2: Red Cars Pay More

The color of your vehicle has nothing to do with how much you pay for insurance. In fact, most insurance companies don’t even ask what color your vehicle it. So go ahead and get that red car you have always wanted.

Car Insurance Myth 3: Your Business Use Is Covered

Your car insurance does not protect you if you are self-employed and using your vehicle for business purposes.

So if you are using your vehicle for delivering items, delivering people, or anything else you can make money doing with your vehicle, you need to talk to your car insurance agent. Many people take on delivery jobs not knowing this and if they were to get into and accident your personal insurance will most likely deny any claims.

Car Insurance Myth 4: Your Coverage Follows You

The car insurance that you purchase is for your vehicle. That’s why you are asked all the details about your vehicle when you get a quote.

If you were to get into an accident while you were driving another person’s vehicle their insurance coverage would pay for the accident, not yours. And the same goes if you let someone else drive your car and they get into an accident, your insurance pays for the accident.

Basically, the car insurance follows the vehicle not the driver.