Since the creation of automobiles there has always been
a risk of collision. An automobile is a very powerful
tool, and it requires a lot of skill to control safely.
However, even the safest driver is at risk of being in
an accident of some sort.
Whether its a deer running in front of you, or an icy
patch on the roadway, there is always a chance something
can happen.
Auto insurance is a service designed to protect a driver
and its passengers from the financial repercussions of
an automobile accident. A motorist pays an insurance company
a premium (fee) for this protection, and each premium
payment ensures protection for a specific amount of time.
Most insurance companies give their customers the option
to get insurance in time increments of six (6) months
or annually. If the required premium is too much, they
usually give their customers the option to pay in monthly
increments.
If the monthly payment plan is chosen, be aware that
interest is usually added to the total premium. So it
is generally more expensive to pay for coverage on a monthly
basis.
Auto insurance coverage is available usually in an a-la-cart
format. They can be put together to form an insurance
plan that best suites your needs. Here is a breakdown
description of the most popular insurance coverage types
provided by insurance companies:
Liability (Minimum Coverage)
Liability auto insurance is sometimes called
minimum coverage because many states require motorists
to carry this type of coverage. This coverage is designed
to protect the rights of pedestrians and other motorists
on the roadway.
In the event that the insured motorist collides with
another motorist or pedestrian, this coverage is designed
to pay for any damages, legal fees, and injuries that
the other motorist or pedestrian incurs. Liability coverage
does not pay for any injuries or damages incurred by
the insured motorist.
Collision
Collision auto insurance is designed to pay
for damages caused to the vehicle and property of the
insured motorist. It is important to note that most
insurance companies will only pay the current Kelly
Blue Book or the National Automobile Dealers Association's
estimated value of your car.
If the cost of repair exceeds the current value, or
if the car is irreparable; a settlement check in the
amount of the estimated value is given to the insured
motorist. This is sometimes referred to as the car being
"totaled." You should know the method of estimation
used, so you can know what to expect in the event your
car is totaled.
Comprehensive
Comprehensive auto insurance is designed to
pay for damages to the vehicle and property of the insured
motorist caused by something other than a standard automobile
accident. Some examples of this are: damages from theft,
fire, vandalism, natural disasters, or hitting a deer.
You should find out from your insurance company exactly
what situations are insured. Unfortunately some people
don't find out that their coverage does not protect
a certain incident until it is too late. Be prepared
by knowing in advanced what you are paying for!
Theft
Auto theft insurance is designed to pay an
insured motorist's in the event their vehicle is stolen.
Note that this does not guarantee that you will receive
what you paid for the vehicle but instead that you will
receive the estimated value.
Rental Reimbursement
Rental Reimbursement coverage provides the
insured motorist a budget for a rental car in the event
their car is immobilized due to damages incurred from
a covered incident. Rental coverage plans usually have
limitations, like a set number of days, or total amount
allotted for the rental.
Be sure find out from you insurance company what these
limitations are.
Medical payments/ Personal
Injury Protection
Both medical payments and personal injury protection
coverage, are designed to pay for injures incurred by
the insured motorist and their passengers. This coverage
comes in different levels.
The coverage could be as little as a set spending limit
for each claim or could cover loss of wages, childcare,
and other long term needs for the insured motorist.
If you have good health
insurance, the minimum coverage to protect you and
your passengers will suffice.
Uninsured/Underinsured motorist coverage
Uninsured/Underinsured motorist coverage is
designed to cover damages and injuries incurred by the
insured motorist in the event they are hit by another
motorist.
If the motorist at fault has no insurance, or if their
coverage is not sufficient to cover the damages; this
coverage covers the additional costs.
Towing and Labor
Towing and Labor insurance
coverage pays for the charge of towing the vehicle if
it is immobilized as a result of a covered incident
type. Be sure to find out from your insurance provider
what incidents qualify.
Gap coverage
Gap coverage insurance coverage is a good coverage to
have if you are still paying for your car. This coverage
pays the difference between the estimated value of the
car and the amount owed to the lender of the insured
if the car is totaled.
An example is you owe the bank $6,000.00 and the value
of the car is now $4,000.00. This coverage pays the
$2,000.00 difference.
Full Coverage
One thing you should understand when shopping
for car insurance, is that there is no such thing as
"truly" full coverage. The term full coverage
is what some insurance companies use to sell their own
combinations of coverage as a package.
You should always find out what insurance coverage
types are included in the insurance company's full coverage
plan before you sign up. Make sure it includes only
the coverage you want. This technique can save you money.
Deductibles are generally $250, $500, and $1000. You
should be aware of your deductible amount because it can
affect your premium. In most cases, the higher the deductible
the lower your premiums are going to be. But be aware
that the deductible must be paid in full before the insurance
company pays any claims.
There has been a rise in accidents involving
uninsured motorists. Many states now require motorists
to be insured, because of the many people who are injured,
or whose property is damaged without financial relief.
To find out what the requirements are for your state,
click the state link below:
