Understanding National General Auto Insurance Coverage Types
National General Auto Insurance offers several coverage types that work together to protect drivers and their vehicles. This guide explains what each type of coverage does and how they differ from one another.
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Liability coverage is the foundation of most auto insurance policies. This coverage pays for injuries or property damage you cause to other people in an accident where you're found at fault. State minimum requirements vary, but most states require some amount of liability coverage. For example, a state might require 25/50/25 coverage, meaning $25,000 for injuries per person, $50,000 for total injuries per accident, and $25,000 for property damage. If you cause an accident that injures someone, your liability coverage pays their medical bills, lost wages, and vehicle repairs up to your policy limits.
Collision coverage pays to repair or replace your own vehicle if you hit another car, object, or structure. This coverage applies regardless of who is at fault. If you finance or lease a vehicle, your lender typically requires collision coverage. The coverage amount is limited to your vehicle's actual cash value. For instance, if your car is worth $12,000 and you cause a collision that results in $8,000 in damage, collision coverage would pay for those repairs minus your deductible.
Comprehensive coverage protects against damage from events beyond your control, such as theft, vandalism, weather, fire, or hitting an animal. Unlike collision, comprehensive coverage doesn't require an accident. If a tree falls on your car during a storm or someone breaks into your vehicle, comprehensive coverage handles the costs. Comprehensive claims typically have lower deductibles than collision claims, and many insurers waive the deductible for glass damage.
Uninsured and underinsured motorist coverage protects you if you're in an accident with a driver who has no insurance or insufficient coverage. This coverage pays for your medical bills and vehicle repairs when the at-fault driver cannot cover these costs. In states with high rates of uninsured drivers, this protection is particularly valuable. For example, if an uninsured driver causes $15,000 in damage to your vehicle but has no insurance, your uninsured motorist property damage coverage would pay the difference between what their non-existent insurance would cover and your actual damages, up to your policy limit.
Practical takeaway: Review your state's minimum coverage requirements and your vehicle's value to determine which coverage types make sense for your situation. Higher-value vehicles and financed vehicles typically benefit from comprehensive and collision coverage, while liability is mandatory in nearly all states.
How Deductibles Work in Auto Insurance Policies
A deductible is the amount of money you pay out of your own pocket when you file a claim. Understanding deductibles is essential because they directly affect both your insurance costs and your expenses when damage occurs.
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Deductibles work on a simple principle: you choose a deductible amount, and your insurance company pays the remaining claim costs. Common deductible options are $250, $500, $1,000, and $2,500. The relationship between deductible and premium is inverse—choosing a higher deductible lowers your monthly premiums, while choosing a lower deductible increases them. For example, if you choose a $1,000 deductible on collision coverage instead of $500, your monthly premium might decrease by $15 to $25, depending on your location and vehicle. Over a year, this saves you $180 to $300 in premiums.
Different coverage types may have different deductibles. Many people choose a lower deductible for comprehensive coverage (like $250) because comprehensive claims tend to be less frequent but potentially more serious. They might choose a higher collision deductible (like $1,000) because collision accidents are more common, and spreading out the cost through higher premiums is less expensive than paying a high deductible repeatedly.
Here's how a deductible works in practice: Suppose you have collision coverage with a $500 deductible, and you cause an accident that results in $3,000 in vehicle damage. The repair shop provides an estimate of $3,000. Your insurance company pays $2,500 ($3,000 minus your $500 deductible), and you pay the remaining $500. If the damage were only $300, you would pay the full $300 yourself because it's less than your deductible, and insurance wouldn't cover anything.
Some policies offer accident forgiveness or vanishing deductibles as optional features. Accident forgiveness means your premium won't increase after your first at-fault accident. A vanishing deductible reduces your deductible by a certain amount (often $100) for every year you don't file a claim, eventually reducing it to $0. These features cost extra but may save money over time if you maintain a clean driving record.
When selecting a deductible, consider your financial situation. If you could comfortably pay $1,000 out of pocket in an emergency, choosing that deductible could save you hundreds annually in premiums. However, if an unexpected $500 expense would strain your finances, the lower deductible provides better financial protection despite higher premiums.
Practical takeaway: Calculate your potential annual premium savings against your ability to pay the deductible if an accident occurs. The best deductible balances affordable monthly payments with manageable out-of-pocket costs during a claim.
Coverage Limits and How They Affect Your Protection
Coverage limits are the maximum amounts your insurance company will pay for a single claim or series of claims. These limits come in different structures depending on the coverage type, and understanding them helps you know what protection you actually have.
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Liability coverage limits are typically expressed as three numbers, such as 100/300/100. This means $100,000 per person for bodily injury, $300,000 total per accident for bodily injury, and $100,000 for property damage. If you cause an accident injuring two people severely, the first person might receive $100,000 (hitting the per-person limit), and the second person might receive $200,000 from the remaining accident total of $300,000. If you cause $120,000 in property damage, your property damage limit would only cover $100,000.
Many states set minimum liability limits far below what financial experts recommend. A state minimum might be 25/50/25, meaning $25,000 per person and $50,000 per accident for injuries. However, a single serious injury claim can easily exceed these amounts. Medical care, rehabilitation, lost wages, and pain and suffering can total hundreds of thousands of dollars. If you're found at fault for an accident where damages exceed your coverage limit, you could be personally liable for the difference. This is why insurance professionals often suggest limits of at least 100/300/100.
Collision and comprehensive coverage limits are based on your vehicle's actual cash value. If your car is worth $15,000 and you select collision coverage, your maximum payout for a collision claim is $15,000 (minus your deductible). Your insurance company won't pay more than the vehicle is worth because doing so would allow you to profit from the insurance. This is called the principle of indemnity.
Uninsured motorist coverage limits work similarly to liability limits, with separate per-person and per-accident amounts. Medical payments coverage or personal injury protection has its own limits, typically ranging from $1,000 to $25,000. These cover medical expenses regardless of fault and may include funeral expenses or lost wages.
Underinsured motorist coverage applies when the at-fault driver has some insurance but not enough to cover all damages. This coverage "stacks" on top of the other driver's insurance, up to your own policy limits. For example, if you're hit by someone with only 15/30/15 coverage, and you have 100/300/100 uninsured motorist coverage, your coverage can potentially pay up to your limits.
As your vehicle ages and depreciates, its actual cash value decreases. You may reach a point where comprehensive and collision coverage costs nearly as much annually as the potential payout, making these optional coverages less cost-effective. Many people drop collision coverage once their vehicle is worth less than $3,000 to $5,000.
Practical takeaway: Review your coverage limits annually, especially if your vehicle's value has changed. Consider increasing liability limits beyond your state's minimum to protect yourself from catastrophic costs, and ensure your vehicle's actual cash value aligns with your collision and comprehensive limits.