Auto insurance 101

Reviewing your auto insurance policy may not be at the top of your to-do list, but maybe it should be. Why? You might be flushing your hard-earned money down the tube by paying for coverages you don’t need. Or worse, you may not have all the coverages you do need. Once you learn a little about various coverages, you’ll realize auto insurance isn’t one-size-fits-all. Knowing what you need and want is important, so brush up on the basics before you meet with your agent.

What kind of coverages do I need?

When you buy an auto insurance policy, you’re actually buying a package of individual coverages. Each coverage protects you against different types of losses.

At the minimum, you will need to purchase liability coverage, which is required by law in 49 states and the District of Columbia. But there is so much more.

Bodily injury liability — This is one of the most important coverages you’ll need. If you’re held liable for a covered accident in which people are injured, medical costs could easily run into the hundreds of thousands. Bodily injury liability helps cover those costs for the victim(s) and for your legal defense.

Property damage liability — This coverage helps pay for covered claims against you and your legal defense costs if your car damages another person’s vehicle or property.

Medical payments — Although similar to bodily injury liability, medical payments coverage helps pay not only for your passengers’ injuries from a crash, it also helps pay for yours up to the coverage limits.

Collision — Collision coverage helps pay for damage to your car caused by a covered collision with another car or object. It also helps pay for repairs even when you cause the accident, up to the value of your car at the time of the accident, minus your deductible. (It is often required with a car loan.)

Comprehensive physical damage (sometimes referred to as Other than Collision) — Bad things can happen to your car besides fender-benders, like bad weather and vandalism. Comprehensive helps cover issues not caused by collision with another vehicle or an object.

Uninsured/underinsured motorist — Reckless drivers are everywhere, and sometimes they either don’t have insurance or they’re underinsured. If you and/or your passengers are injured by someone without proper coverage, or are the victims of a hit-and-run, this coverage can help protect you.

Talk to an agent about what’s appropriate for you and the car you drive.

OK, I keep hearing the word “deductible.” What the heck IS a deductible, anyway?

When you buy an insurance policy, you agree to how much you will be willing to pay if anything goes wrong. For example, if your policy has a $100 deductible, and the damage to your vehicle totals $500, you will pay $100 to the auto body shop and your insurance company will pay $400. The higher the deductible, the lower your premium (the amount you pay for your policy), which means it’s a good idea to go with a higher deductible if you can afford it.

The good news about premiums…

Still think your insurance costs are too high? Grinnell Mutual offers a variety of discounts to cut the cost, including our Mile Marker Auto Loyalty Program. An auto insurance policy with Grinnell Mutual is all it takes to save money with Mile Marker. Talk with your agent to make sure you are getting all rewards you deserve.  


The road ahead is long and beautiful. Let Grinnell Mutual help you navigate insurance. We’ve got a whole trunk full of comprehensive auto insurance coverages, as well as a long list of discounts and incentives. Chat with your agent today.