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Understanding Your Car Insurance Policy. Are you confused by all the terms your auto agent uses? Here is a break down of the basic
auto insurance terms and what they mean. Most states require you to purchase a minimum amount of certain kinds of coverage. To protecting
yourself from a lawsuit or costly repair bills, then it makes sense to buy more than what's required. When you purchase car insurance
it is broken up into several sections, liability, collision and comprehensive.
Liability coverage is required in most states. If you are in an accident and it is your fault your liability insurance will pay for
the injury and property damage expenses caused to others in the accident, including your legal bills. It will also cover medical bills
and lost wages. Most states require the purchase auto liability insurance except New Hampshire, South Carolina, Tennessee, Virginia,
and Wisconsin. The minimum amount of liability that is required varies from state to state and that should be dicussed with your insurance
agent.
Collision coverage will pay to repair your vehicle. Collision coverage is normally the most expensive component of auto insurance.
By choosing a higher deductible you can keep your premium costs down. Although keep in mind that you must pay the amount of your deductible
before the insurance company pays any money after an accident. If you drive an older car that has little value many owners opt out
of carrying collision coverage because the insurance companies rarely pay more than the blue book value of a car. Be sure to check
the value of your car to see whether collision coverage is cost effective.
Comprehensive coverage will pay for damages to your car
that were caused by anything other than an auto accident. Damages from theft, fire, vandalism, natural disasters are all covered under
your comprehensive coverage. This coverage also comes with a deductible and your insurer will only pay as much as the car was worth
when it got wrecked. As with the collision coverage it is wise to check to see if it is cost effective to carry this coverage
Personal injury protection (PIP) and broader "no-fault" coverages are expanded forms of medical payments protection that may be required
in your state. Some states have optional PIP or no-fault coverage. Expanded features include payments for lost wages and child care.If
you have a good health insurance plan, there might be little need to buy more than the minimum required PIP or MedPay coverages, if
at all. And, if you already have disability insurance, there's little reason to purchase higher-than-minimum amounts of PIP.
Uninsured
Motorists coverage pays for your injuries if you're struck by a hit-and-run driver or someone who doesn't have auto insurance. It
is required in many states.Underinsured motorists coverage will pay out if the driver who hit you causes more damage than his or her
liability coverage can cover. In some states coverage may also pay for property damages. It is best to at least carry the minimal
amount of coverage.
Additional coverages include rental, to cover the cost of renting a car while yours is getting repaired, towing,
and gap coverage for car owners who owe more than the car is worth.
