How to Determine the Right Amount of Car Insurance Coverage

Car insurance is not a one size fits all service. Trying to figure out how much auto insurance you really need can be confusing unless you’ve got an idea what to base that critical decision on. Why is it so critical? Although most of us don’t think about our auto insurance on a daily basis, when you find your self in need of coverage due to an accident or other unexpected event, too little coverage can be costly, stressful, and devastating.

On the other hand, paying too much every month only serves to waste valuable money that your family could use in other ways. Knowing how to make that determination can help but your mind at ease now, and in the event of unexpected occurrences.

Factors That Impact Rates And Coverage

Many different factors determine each individual’s rate depending on your category based on things like age, gender and credit rating. Where you live can make a big difference as well. Your state can have a big impact on your insurance rate. While you probably won’t choose to move just because of a high auto insurance rate, it’s good information to have before deciding to make a move.

Purchasing an insurance policy can be very confusing. How do you know how much coverage you should buy? If you ask an auto insurance agent how much to buy, he may tell you to get as much coverage as you can afford. But auto insurance is not that simple. One of the first things to find out is the minimum amount of coverage that your state requires. You will then need to find out what protection that minimum auto insurance provides. What additional coverage is available, and what does it costs? What protection does it offer? These coverage definitions can help explain:

Comprehensive Coverage

Comprehensive physical damage coverage covers your vehicle and should also cover any other vehicles you drive. Comprehensive physical damage coverage covers other vehicles that you drive for losses that happen for reasons other than a collision. Comprehensive insurance covers your car if it gets stolen or damaged.

Collision Coverage

Collision coverage covers damage to your car when you are involved in an accident, whether you hit or are hit by another car or object. This kind of coverage will pay to repair your car minus the deductible. You can consider dropping this coverage if you have an older car since coverage is limited to the cash value of you car.

Medical Coverage

Medical Payments covers the medical expenses for you and your passengers if you are hurt in an accident. You may also have coverage protection as a pedestrian if a vehicle hits you. This coverage applies regardless of who is at fault.

Uninsured Motorist Coverage

Uninsured motorist coverage covers bodily injuries to you and your passengers when the other motorist either has no insurance coverage or is under insured. This coverage kicks in for accidents that are not your fault. In some states uninsured motorist coverage is available to cover any damage done to your car. This is important coverage to consider in case you are ever involved in an accident with an uninsured driver.

Personal Injury Coverage

Personal Injury Protection covers medical, hospital and funeral expenses of an insured driver, others riding in the car with the driver and any pedestrians hit by him or her.

Property Damage Liability

Property Damage Liability covers you if your car causes damage to another person’s property. This coverage provides legal defense if someone else someone decides to file a lawsuit against you. It is wise to buy enough of this coverage to take care of any damage your car could do to another car or object.

Rental Car Reimbursement

Rental Car Reimbursement covers the cost of renting a car if your car isn’t drivable, or while your car is being repaired due to a covered accident.

When you are deciding what type of coverage you need, consider your assets. What do you need to protect from being taken away if you cause an injury or damage with your car?

What You Should Know About Auto Insurance Coverage

Having an auto insurance coverage will help you protect whenever you figure in a car accident or when there is a loss to your automobile like fire and theft. You also need to be protected in case you injure another person through the use of your car or you made a damage to somebody’s property when using your car.

Auto insurance coverage is excluded from most homeowners forms thus auto insurance must be covered separately and it is called a personal auto policy. Since the personal auto policy contains property and liability auto insurance coverage, it is considered a package policy. The auto insurance policy form contains four distinct coverage with each coverage having its own conditions, agreements and exclusions.

One part of the auto insurance policy is the liability coverage. This is almost mandatory in most states in the United States. This coverage provides for the amount that the auto insurance company will pay to the victim of the car accident or to the value of the damaged property but only up to a certain amount provided in the car insurance policy. The person who caused the accident will pay any excess on the auto insurance policy limits. This coverage can be a standalone coverage or it can be combined with other coverages.

Another part of the auto insurance policy is the medical payments coverage. This coverage provides medical payment if you are injured in a car accident but only up to a certain limit of the policy. This is an optional coverage and it may only be included in the auto insurance policy if the policy includes liability coverage.

The third part of auto insurance policy is the uninsured motorist coverage which protects you, the other passengers of the vehicle and the vehicle itself from an uninsured driver. This is subject to the law and may vary from one state to another. In some states this is mandatory but in others the insured may opt out of this coverage in the policy. This type of coverage can only be written if there is also a liability coverage.

The fourth coverage of the auto insurance policy is the coverage for the damage to your car. This covers the actual physical damage to your vehicle. The policy covers the damage brought on the collision of your car and damages other than collision like fire and theft. This type of coverage can be a standalone coverage or can be written in conjunction with a liability coverage.

The personal auto policy can be written to a single individual or to the husband and wife who are on the same household. Most auto insurance coverage are written to include all of the available coverages but if you are saving money, you can choose whatever auto insurance coverage you want and opt out of the others which are not mandatory. Just be reminded to read the fine prints since there are conditions, limitations and exclusions in the auto insurance coverage.

Demystifying Car Insurance Coverage

Making sense of car insurance can be daunting given the various different coverage options available. What does each one cover, when do you need to get it and when is just not worth the money you pay. Well they say knowledge is power and we’ll be giving you some today. This article will talk about a few of the most popular car insurance coverage and (hopefully) help you decide whether you need them or not. When you compare auto insurance quotes online, it’s important that you pick a company not just on the basis of the rates they give you, but also whether the amount of coverage they give you is worth the price.

Gap Insurance:

GAP stands Guaranteed Auto Protection. If you take a car on lease or loan, and have an accident where the car is totaled, Gap insurance will cover the difference between what the insurance gives you for the car and the amount outstanding on your debt. Due to high depreciation costs and the low resale value of cars, the value of your car drops significantly immediately after you buy it and continues to do so. So Gap insurance is very important for those who take a loan or lease to buy a car.

Liability:

You are required to have some liability coverage in order to drive legally, though the amount varies from state to state. If you get into an accident and are found at fault, liability coverage will take care of the damages the accident caused to the other party. Bodily injury liability coverage will cover the other party’s medical bills incurred due to accident injuries. Property damage liability coverage takes care of the damages you have caused to the property and assets that do not belong to you. You definitely need this, not only because the law requires it, but because if you don’t, you could be responsible for thousands of dollars in damages to life and property if found at fault.

Collision:

Collision coverage takes care of the damages to your car if you hit another car or stationary object, no matter whose fault it is. This kind of coverage is important for two reasons. Firstly, if you crash into a stationary object or are found at fault in an accident, you will have to pay for your car’s repairs yourself if you don’t have coverage. Secondly, if the other party is found at fault but doesn’t have insurance, you can sue them, but there is no guarantee of having your damages covered by them, and this is where collision coverage comes into play.

Comprehensive:

A broad explanation of comprehensive coverage would be that it takes care of damages that are not caused by a motor accident. You might think that the worst that can happen to your car is a collision. But that’s probably because you haven’t seen what a hailstorm or an angry vandal can do. If your car is stolen, vandalized or damaged due to certain natural disasters, encounters with an animal, fire, falling objects, your comprehensive coverage will have you covered.

Note: Collision and Comprehensive are important, but you can think about dropping them if your car’s value is lower than the total of your deductible and insurance rates. If you can afford to pay for damages towards of replacement of your car yourself, you don’t need these.

Personal Injury Protection (PIP):

This coverage compensates you for medical payments incurred by you and other passengers in your car. Some car insurance companies also cover lost income, trauma, and services in the event of an accident. Some states require that you carry PIP and it is enforced to protect you against the rising numbers of the uninsured and underinsured motorists. Many people choose to purchase it even if it isn’t required to protect themselves from the possibility of suffering medical expenses and loss of income.

Underinsured Motorist Coverage and Uninsured Motorist Coverage (UIM/UM):

This coverage is also compulsory in some states due to the high incidence of un/underinsured drivers on the road. This coverage pays for damages to your own self and vehicle if the other party does not have insurance/has insufficient insurance. Someone who has adequate collision and PIP coverage does not need this coverage (unless mandated by the state) because collision and PIP encompass the benefits of UIM/UM.

Getting just enough insurance to drive legally may seem tempting, however, the potential damages, debt and financial burden of an accident severely outweigh the money you would spend on getting thorough coverage. With this article, you can understand the benefits of each coverage type, determine how applicable it is to you, and make the right call. Remember, you can get cheap auto insurance quotes without compromising on coverage if you look hard enough.