Considerations When Buying Personal Insurance Coverage

All families will need a financial plan which includes personal insurance coverage in order to cope in the event of accidents, death, illness and disability. As you are planning insurance coverage you will need to consider your economic situation, age and number of dependents. There are a confusing range of insurance plans and which ones are best for you will depend on numerous things. Life insurance for instance is vital if you have a spouse or dependent children but is obviously less crucial for people who do not have dependents. Everyone should purchase disability insurance as all of us need to be covered if we are unable to go to work. Below are short descriptions of some of the different kinds of personal insurance coverage available.

Auto Insurance
* Needed by everyone who drives a car
* Minimum liability coverage essential

Liability insurance is needed before you can register a car and many states require a medical cover of at least $100,000, a minimum accident coverage of $300,000 and $50,000 for property damage. Unfortunately these minimum values may not be adequate and we would recommend you have above the minimum required cover. Other coverage recommended also includes collision, theft and fire coverage. Cost of the insurance can often be reduced by going for a higher deductible.

Prices vary a a great deal between companies and you should obtain a range of quotes before choosing. There can often be discounts available which may depend on on your driving record, age, where you live etc.

Homeowner’s Insurance
* Considered necessary for all who own a house

Home personal insurance coverage must be sufficient to cover rebuilding costs and replacing furniture and fixtures in the event of fire or other damage and to be covered in the event of injury happening on your property. To decide the amount of insurance you will need for rebuilding, subtract the cost of the land and foundations from the house value and ensure that you have cover for at least 80% of the resulting cost. Liability insurance coverage for most householder’s policies is typically around $250 ,000.

Life Insurance
* Essential for anyone with a dependent spouse, children or others

Life insurance is a kind of personal insurance coverage that pays out to your dependants when you die. The amount of coverage necessary of course, will depend on your financial situation and circumstances and the amount those that survive you will need to continue to enjoy the same standard of living. You need to take into account costs of education and outstanding debts when deciding on the level of insurance cover that you need.

Disability Income Insurance
* Essential by everybody who supports themselves

Personal disability insurance coverage is indispensable for all of us for times when we cannot work. Many companies provide a broad insurance coverage for employees but this is frequently short term or low coverage and often not really adequate. The cover is often up to 65% of your salary and is frequently for a restricted period. If you can, try to find coverage that lasts until you retire. If your employer offers cover take care that it is enough and that it will last long enough.

Health Insurance
Medical insurance is generally offered by employers as private medical insurance coverage is frequently much more expensive. Check out the conditions of your employer’s medical insurance for any constraints.

What is Comprehensive Auto Insurance Coverage?

Comprehensive auto insurance is a type of insurance coverage that protects against physical damage on your car, and is often referred to as “other than collision” (OTC) coverage, or simply “Comp”. The comprehensive coverage of an auto insurance policy can be a little confusing – so let’s take a look and lay it out in an easy to understand fashion.

Auto insurance can be broken down into two general components – Liability coverage, and Physical Damage coverage. Liability, which is required in most states, is referred to as Bodily Injury Liability, and provides coverage in the event of bodily injury or death for which you are responsible. Physical damage coverage, on the other hand, covers the cost of damage repairs (minus the deductible) on your car that are incurred as a result of an act or event that is covered in the policy.

Within the Physical damage coverage component – there are two main types of coverage – collision and comprehensive. These are two distinct, separate forms of coverage. Collision covers damage to your car when your car is damaged in an accident. When your car collides with another object – or overturns or rolls – your collision coverage pays for the repairs. Colliding with an animal such as a deer is covered not in Collision – but is in Comprehensive. Comprehensive covers physical damage outside the realm of Collision.

Many people mistakenly interpret that the term “comprehensive coverage” to mean that they are covered for any sort of damage to their cars. This is not true. Comprehensive coverage only pays the cost of damages that occur as a result of a non-collision incident. If you do not have collision coverage, you end up paying for the expenses incurred in an accident. Also, drivers should be aware that comprehensive covers the cost of repairing or replacing the car only, and does not provide any restitution for personal items in the car that were damaged or stolen. If you have expensive stereo equipment in your car, for example, you will want to invest in a separate insurance policy that covers personal property. Additionally, Comprehensive also does not offer protection against damage caused by normal road use.

What Comprehensive Covers

  • Fire
  • Theft
  • Riot
  • Hail, water, or flooding
  • Vandalism
  • Wind
  • Damage resulting from animal
  • Glass Breakage
  • Missiles or falling objects (the term missiles used here does not refer to the military term- instead refers to any flying or propelled object)

Comprehensive does not cover theft or vandalism caused by family members or employees. Some policies may offer an extension that covers you when you are driving a car other than your own (though it this extension normally has reduced coverage benefits). It’s important to read your policy carefully to learn what is covered and what is excluded.

Can you purchase only comprehensive and not collision? Some insurance companies will actually allow this is certain situations. Most insurance companies, however, do not allow you to purchase collision without comprehensive coverage.

Cost of Comprehensive Coverage
As with any component of auto insurance, cost is driven by the following factors; the age of the driver, the drivers experience, the value of the car, the area where the car will be driven, and the estimated annual mileage. Always compare the quotes of Auto Insurance companies online to find the lowest cost insurance that meets your needs.

Weighing the cost of the insurance coverage against the value of the vehicle will show if it is cost-effective to carry this coverage at all. Comprehensive and Collision coverage’s always have a deductible, which can be as cheap as $200 and as expensive as $1,500. A higher deductible equates to a lower insurance premium.

Who Needs Comprehensive Coverage?
Not required by any state – as states are more concerned about the liability coverage. However, if your car is either being financed or leased – the financing company will usually require physical damage coverage.

For older cars you may consider excluding collision and comprehensive coverage since coverage is normally limited to the cash value of the car. Comprehensive coverage is highly recommended in case your car is worth over $4000. You may also find it valuable if you believe your car is susceptible to theft.

Car Insurance Coverage – Why It Makes Sense to Have the Right One

Most people look at car insurance as a burden, one that they have to bear because of State insurance laws. They buy the bare minimum state mandated liability coverage to stay legal and carry on driving, assuming they are completely covered in case of a mishap. Yet others start with buying multiple car insurance coverages, and over time decide they need to save money, which can be done by cutting on certain coverages. The rude awakening comes when they get into an accident where they are at fault, or have their car stolen or damaged, and realize their policy did not include the necessary car insurance coverage to cover any of these events. A little bit of planning and foresight can help avoid such situations.

Car insurance isn’t rocket science, and all it takes is some understanding of the basic function of each car insurance coverage and then deciding if it’s really worth investing in or not. This is especially true if you have an old beat up car. Would you rather pay for comprehensive and collision insurance and the deductibles as well (at the time of claiming), or does it make more sense to simply go without, and save the premium and deductible money in an emergency fund for your car? Insurance is a gamble and you pay for the peace of mind from knowing that in case of an eventuality you are covered. You may or may not need to use it.

Liability or third party insurance is another area where you need to consider the particulars of your location, the driving skills of the other drivers using the car, and your financial capability to pay the other driver for any damages you might have caused, in case you are found at fault in an accident. If you drive long hours, on congested roads, or if you have a relatively inexperienced driver also driving this car, you might consider keeping a high liability car insurance coverage. TX car insurance laws for example, ask for a minimum liability of 30/60/25 starting January 2011. One in five people in TX are uninsured, so while you want to be sure you get adequately compensated in case of an accident, you might also want to buy Uninsured Motorist/Underinsured Motorist coverage if you live there.

Umbrella insurance is one of the most under rated car insurance coverages. It’s actually a very smart way to increase your liability coverage and comes in handy incase of potentially bankrupting lawsuits. You don’t want to have to pay out of your pocket in case your car hits a school bus full of kids and hurts somebody seriously or ends up totaling a high-end luxury car. It doesn’t cost too much to get $2 million umbrella insurance, and it kicks in only when the upper limits of your liability coverage have been exhausted.

Gap insurance is a good option to invest in if your car is not fully paid for and you still have to make most of the payments. In case your car is totaled, your full car insurance coverage will only pay for the car’s blue book value which factors in its depreciation amount, whereas you will still need to pay your dealer the balance installments for the car, making you upside down on your payments. Gap insurance fills this gap and helps you pay off the balance amount. However, investing in gap insurance is only recommended if you still owe most of the money on your car.

PIP or no fault coverage is mandatory in some states while it isn’t available in others. However if it is available in yours, it’s a good option to look into, after reviewing your health insurance policy. Personal Injury protection coverage takes care of medical, work loss, funeral, survivor’s loss and other maintenance expenses incurred post an accident regardless of who is found at fault in the accident; a good car insurance coverage to consider as it takes so many factors into consideration while calculating your claim account.

So next time you decide to buy yourself just a minimum liability car insurance, think twice. The liability coverage will only compensate others for injury or property damage caused by your car; it will do nothing for you. Also look at the other car insurance coverages and try to strike a good balance of rates and coverage to give you better protection in case of an unforeseen eventuality.