Types of Car Insurance in Georgia

What are the types of Car Insurance in Georgia?

Though we often talk about just “car insurance,” the truth is that there several types of car insurance in Georgia. If you’re confused about what kind of insurance covers which situations, you’re not alone! That’s why we’ve put together this quick guide to clear things up. We’ll talk about the three main types of car insurance.

Liability insurance is what most people think of when they think about car insurance. Liability insurance covers the other driver’s medical bills and property damage if you’re at fault for a car accident. Your liability insurance never covers your medical bills or car repair costs, no matter who’s at fault for the accident.

Collision insurance covers the repairs to your car when it’s involved in a crash with another vehicle or object. Unlike liability insurance, collision insurance covers your vehicle regardless of who’s at fault for an accident. Note that someone must be driving the car at the time of the accident for collision insurance to cover anything.

Comprehensive insurance covers damage to your car in most other situations not covered by collision insurance, such as theft, vandalism, and natural disasters. In other words, comprehensive insurance covers damage to your car when no one is driving it.

What is the Minimum Coverage in Georgia for Car Insurance?

Of the three main types of car insurance in Georgia, only liability insurance is required by law. If you drive without insurance in Georgia, you can face stiff fines, license suspension, and possibly jail time.

Also, keep in mind that intentionally misleading the insurance company by providing false information is a serious crime in Georgia. Suppose the insurance company finds out that you provided false information on a claim or in your application. In that case, they can refuse to process your claim and even drop your coverage altogether. You might find yourself in legal trouble as well.

Minimum Liability Insurance

In Georgia, the minimum legally required liability insurance is $25,000/$50,000/$25,000. This translates to:

•   Bodily injury liability: $25,000 per person, $50,000 per incident
•   Property damage liability: $25,000 per incident

In the case of an accident, bodily injury includes medical bills and other expenses if someone is injured. This means that liability insurance in Georgia is required to cover no more than $25,000 of the other driver’s medical costs if you’re at fault for the accident. If more than one person gets injured in the accident (not including you), then the minimum liability insurance will cover no more than $50,000 in medical expenses.

The property damage liability component covers repairs to the other driver’s car and other property such as buildings and walls if you’re at fault for the accident.

Collision Insurance

Currently, in Georgia, only liability insurance is legally required. Therefore, there is no legal minimum collision insurance coverage. However, if you’re financing or leasing a car, the leasing or financing company often requires you to maintain a minimum amount of collision insurance coverage. If you don’t, then the financing or leasing company will probably take out a policy themselves and charge you the premium. And you can be sure that they aren’t interested in finding the cheapest option. Make sure you read your contract carefully so you understand how much collision insurance you need to carry.

Once you’ve paid off the car or the lease term is over, you can decide whether you want to keep the collision insurance coverage. Just don’t forgot to renew your liability insurance policy!

Deductibles and Policy Limits for Collision Insurance

A collision insurance policy is defined by the deductible and policy limit. The deductible is how much you agree to pay before the insurance company compensates you for an incident. The policy limit or policy maximum is the maximum amount the insurance company will pay you.

Example of How Collision Insurance Works in Georgia

Mark is involved in an accident and is 70% at fault. Therefore, he cannot receive any compensation from the other driver’s liability insurance company. However, Mark does have collision insurance coverage with a deductible of $1,000 and a policy limit of $10,000. The total damage to his car is $5,000.

How Collision Insurance Works for Mark

•   Mark must first pay the $1,000 deductible for the repair costs to his car. That leaves $4,000 in repair costs.
•   Mark’s collision insurance company covers the remaining $4,000 in repair costs.

Comprehensive Insurance

Since Georgia legally requires only liability insurance, there is no legal minimum coverage for comprehensive insurance. That said, if you’re financing or leasing a car, then there’s probably a requirement in the contract to carry a minimum amount of comprehensive insurance coverage. Typically, it is expected that you will find your own insurance policy. Still, if the financing or leasing company finds out you haven’t been keeping comprehensive insurance, then they’ll find a policy themselves and send you a bill. Not surprisingly, leasing and financing companies aren’t interested in getting the best deal. That’s why it’s much better that you read your contract carefully, so you know precisely how much comprehensive insurance to buy.

Deductibles and Policy Limits for Comprehensive Insurance

Just like with collision insurance, a comprehensive insurance policy will include a deductible as well as a policy limit or policy maximum. Keep in mind that the policy limit is the maximum amount that the insurance company will pay minus the deductible.

Example of How Comprehensive Insurance Works in Georgia

During a storm, a tree falls onto Jessica’s car. She has comprehensive insurance coverage with a deductible of $500 and a policy limit of $5,000. However, the total damage to her vehicle is $6,000.

How Comprehensive Insurance Works for Jessica

•   Jessica first pays the deductible for the repair costs, which is $500. This means that there are $5,000 left to pay in repair costs.
•   Jessica’s comprehensive insurance company pays $4,500 in repair costs, that is, $5,000 (the policy limit) minus $500 (the deductible).
•   That leaves $1,000 in repair costs. Jessica must pay these costs herself.
•   In total, Jessica pays $1,500, and her comprehensive insurance company pays $4,500 in repair costs.

Is the Minimum Insurance in Georgia Enough Protection?

The minimum legally required insurance in Georgia will only cover the other driver’s medical bills and property damage if you’re at fault for a car accident. If you’re at fault, then the minimum legally required insurance in Georgia will not provide anything to cover your medical bills or car repair costs.

In addition, the minimum liability insurance limits in Georgia have not kept up with the rising costs of health care and car repairs within the state. In other words, you can be at fault for an accident where the other driver’s medical bills far exceed $25,000. Once your insurance company pays out the policy limit for a claim, then it’s no longer responsible for covering anything else. You would be personally liable for paying the difference.

In terms of collision and comprehensive insurance, usually, the car financing or leasing company will require enough coverage so they can get most of their money back if the car is in a serious accident or totaled. You may be required to take out additional special insurance policies such as GAP insurance in some cases. If your car is totaled in an accident, the car’s salvage value may be less than the money you still owe. GAP insurance coverage compensates the leasing or financing company for the “gap” between the salvage value and outstanding loan or lease value. Read your leasing or financing contract carefully to know exactly the minimum insurance you need to carry.

Once you’ve paid off your car, you should think about how much you need your car for essential tasks like getting to work or school. If you absolutely need your car for these things, then you should consider keeping at least some amount of collision and comprehensive insurance. That way, if your vehicle is involved in an accident, you won’t be stuck with a surprise repair bill if you’re at fault. Some of these policies even reimburse you for a rental car while your car is repairing so you can get back on the road as quickly as possible.