Auto Insurance: What You Need to Know
By USInsurance.com
Auto insurance can be confusing because there are so many different types of coverage. Here's a quick list of the types of insurance that comprise auto insurance, and how much coverage you should consider buying.
Liability:
If you’re in an accident, this form of insurance protects you from liability you might face from the other parties in the accident. It’s divided into two areas. The first is bodily injury, which covers medical bills, loss of income and legal expenses. If you don’t have enough liability coverage, you might have to dip into your savings to pay off big bills from lawsuits.
The other liability coverage is property damage. This covers damage to physical property like homes and storefronts, and vehicle repair or replacement costs for the other party in the accident.
Vehicle Protection:
Damage to your car is covered under this area. Like liability, it's split into two areas. The first is collision, which pays for repairs or replacement of your vehicle because of an accident, up to your car’s actual cash value, i.e., the car’s value after accounting for depreciation and wear and tear.
Comprehensive insurance coverage is for damages to your car for things other than accidents. This includes storms, vandalism, or striking an animal on the road.
Other coverages: Underinsured/Uninsured Motorist Coverage covers you in the event you’re in accident with another motorist who has no or very little insurance.
Medical payments coverage: If you’re in a covered accident, this covers medical expenses for yourself or your family that may result.
Personal Injury Protection: This helps cover medical expenses, as well as any loss of income or child-care expenses you might face while healing from an accident.
So What Does It Cost?
To determine your premium, determine the coverage limit; the higher it is, the more you pay in premium. If you lower your coverage limit, you’ll play less in premium, but you’ll pay more out of pocket later if you’re ever in an accident that exceeds the limit.
Another way to lower your premiums is to increase your deductible. A deductible is the amount you pay if you make a claim for an accident. If you have a higher deductible, you have a lower premium.
For example, if your car requires $2,000 in repairs after an accident and your deductible is $500, you will have to pay $500 out of pocket, and the insurer will pay the rest, $1,500.
Other ways to lower your premium – safe driving, avoiding traffic tickets and accidents. And if you have children on your policy, their good grades can lower the premium.
Compare Policies:
Another way to cut your costs is to shop around. The Internet makes it easy to get multiple quotes for auto insurance, and you can tweak the various coverage and deductible levels to get different premium options.
But always keep the ‘worst-case’ in mind, to ensure you have enough coverage and be sure you can cover any deductible amounts that you select -- you might save on your premium if your deductible's high, but you could be in a jam if you don't have the cash to pay the deductible and you need to get your car fixed.
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