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Do I have to buy car insurance liability protection when I rent a car?

When you rent a car, be sure you have car insurance liability protection. You may not have to buy it from the car rental company, however. If you own an automobile, your standard car insurance liability coverage may cover you when you rent a car. Otherwise, be sure to purchase car renter’s liability car insurance at the car rental counter or, if you rent frequently, consider purchasing a car renter’s liability policy from a car insurance company. If you rent on business trips, ask your employer if you’re covered on their car insurance.

Note: Your policy may not cover you when you travel outside the United States. Check with your car insurance company.

Do I need liability car insurance even if I live in a no-fault state?

You need liability car insurance even if you live in a no-fault state. In a no-fault car insurance state, automobile drivers and their car insurance companies pay their own expenses in a car accident -- regardless of who was responsible for the crash. However, each no-fault state has a threshold above which a person who causes an accident can be sued. A suit might arise in the event of a serious injury.

A no-fault car insurance state is one in which automobile drivers (and their car insurance companies) generally must pay their own costs in a car accident regardless of who was responsible for the crash. In most no-fault states, your ability to file a lawsuit after an accident is strictly limited.

What does liability car insurance cover?

If you injure someone or damage a vehicle or other property in an auto accident, your liability car insurance will pay the person’s medical expenses and the bills to repair the vehicle or property. Auto liability, technically known as "bodily injury liability" and "property damage liability," protects you if you are held responsible for an accident.

Liability protection can account for more than half of a car insurance policy’s cost. Without adequate protection, however, you could easily lose everything you own, including much of your future earnings, if you are sued successfully.

In all states, collision and comprehensive car insurance, the portion of your automobile insurance policy that covers damage to your car, is optional. However, if you have a car loan, the lender or dealer will require collision/comprehensive car insurance coverage to protect its interests. After your car is about five years old or you’ve paid off your loan, you might want to drop the collision and comprehensive car insurance coverage. Compare the value of your car minus the car insurance deductible to your annual premium. For example, collision and comprehensive coverage won’t do you much good if your car is worth only $1,000 or so and you have a $500 deductible. You’d be better off putting your collision/comprehensive premiums into a savings account.

Collision coverage pays for damage to your car from an accident. Comprehensive car insurance covers damage caused by fire, flood, theft, tornado, and just about any other physical damage not covered by collision. In all states, both of these car insurance coverages are optional. However, if you have a car loan or are leasing your car, the lender or dealer will require you to carry collision and comprehensive car insurance coverage.

If your driving record isn’t good, getting car insurance can seem next to impossible. But you can’t afford to drive without car insurance and risk losing everything -- possibly even some of your future earnings -- if you get sued because of an auto accident. Besides, in many states, it’s a crime to drive without car insurance.

You might be able to get car insurance through state-mandated "assigned risk" programs. The car insurers in your state are required to take on poor risks in proportion to how much business the car insurance companies do there. Or, you can purchase auto insurance on the non-standard market. These car insurance companies are not always the most scrupulous, so investigate their reputations and financial health before buying. Non-standard market coverage isn’t cheap, but it may be better than the rates of well-known car insurance companies, and it probably beats taking the bus. Your state Department of Insurance or Department of Motor Vehicles can help you check the reputation of a non-standard insurer or give you other advice to help you get insured.

You cannot deduct your automobile insurance premiums if your car is just for personal use. However, if you use your car for business, you may be able to deduct the business portion of your annual premiums. You also might be able to write off some of the cost if your employer requires you to use your own car on the job and does not reimburse you for the expense.

If you already have good health insurance, you won’t necessarily need medical payments car insurance to cover your own medical bills. But you may want to consider purchasing it for any passengers in your car. If you live in a no-fault state, you probably have to buy a minimum amount of medical coverage called "personal injury car insurance" or "no-fault" car insurance. This coverage pays your medical bills, and, in some cases, your loss of income if you are disabled, regardless of who is to blame for an accident. If you don’t live in a no-fault state, you don’t have to purchase medical payments coverage, but you might want to consider buying it anyway. Liability car insurance doesn’t cover accidents in which no one is proven negligent, nor will it cover your injuries in accidents that you cause.

Uninsured motorist coverage pays you if an uninsured motorist hits your car and you are injured. Similarly, underinsured motorists coverage protects you if the driver who crashes into your car has some -- but not enough -- insurance. In some states, uninsured coverage can boost the total premium substantially.

A typical automobile insurance policy has three components:

• Liability
• Medical
• Collision/Comprehensive

Liability coverage protects you if you are held responsible for an accident that causes injury or loss to other people. Medical coverage pays medical and hospital bills for you and the passengers in your car. Collision/comprehensive coverage pays for damage to your car due to an accident, theft, or damage from vandalism or fire. All of these coverages are limited to the amount stated on your policy.

The senate passed a law last week making auto insurance mandatory for Mississippi residents. The following quote comes from the Picayune:

JACKSON (AP) - Mississippians would have to show proof of insurance when they got a vehicle inspected, were stopped at a roadblock or bought a new car tag under a bill passed by the Senate on Tuesday.Senators added the provision to a House bill that had required the Department of Public Safety to maintain a database of insured motorists. The Senate removed the database from its version of the bill.

Senate Insurance Committee Chairman Dean Kirby, R-Pearl, said 22 states have laws requiring motorists to show proof of insurance when they buy car tags. He said Mississippi and Tennessee are the only Southern states without a law. Under current law, motorists who are stopped for speeding or some other infraction must show proof of insurance. Motorist face a $1,000 for failing to have insurance.

If they purchase insurance before their court date, the fine is $100. Under House and Senate versions of the bill, the fine would increase to $500.People who buy or renew a car tag over the Internet or through the mail would not have to show proof of insurance, Kirby said.

The bill is House Bill 1238.

This comes from the Business Standard and is good news for those of us who pay for auto insurance (which is about 90% of us).

Automobile insurance is likely to get cheaper once the regulatory authority IRDA puts in place its detariffing structure.

Similarly, Mediclaim policies are likely to be dearer, feels the business head of (commercial insurance) of HDFC Chubb General Insurance, K V Prasad.

Commenting on the post detariffing scenario in general insurance industry at a meeting here today, Prasad said that car owners with good maintenance and driving track record were likely to be immensely benefited from this.

“The owner of a car who drives himself will be the biggest beneficiary. The car which is operated by both the owner and driver will be at a slightly higher risk category. On the other hand there will be factoring for the commercial vehicles,” he said.

An age old question, but one that's simple, really.

The car insurance industry is one that is based on statistics that have been accumulated over the years. Males under the age of 25 typically pay higher premiums than women of the same age bracket. This is because, statistically, males are more prone to cause car accidents, and thus are a higher liability to their insurance companies.

The way insurance works is that the premium for the driver is paid either monthly or annually (or bi-annually) into a large pool of money and is used by the insurance company to pay off any repairs ortotalled vehicles. If you never get into an accident or have any outstanding tickets, you'll typically get a good driver discount, which varies between providers. Young male drivers (or their parents) typically pay more to this pool of money. It's not very fun, and sometimes irritating, but I'm sure we've all seen our share of idiots on the roads that fall into the under 25 age bracket. It's obvious to see why this age bracket typically pays more.

Comments on this or anything else I've written, like always, are welcome.