It is almost impossible to affordably own a vehicle without car insurance. No one is invincible and accidents and damages can be very costly. It is important to make sure you have adequate coverage the not only fits your lifestyle, but also your wallet. At the very least, most states require that you carry auto liability coverage, but it important for your own benefit to have a policy that has much more.
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♦ Medical Payments / Personal Injury Protection
♦ Bodily Injury Liability
♦ Comprehensive
♦ Collision
♦ Property Damage Liability
♦ Uninsured / Underinsured Motorist Coverage
Auto Insurance Coverages Explained
An auto insurance policy actually consists of several different coverages. Required in most states, it is something all drivers must posses.
Liability Insurance
This coverage is the basis of all auto insurance policies, and the minimum required in most states. If you’re found at fault in an accident, liability insurance pays for the injury and property damage expenses of the third party involved in the accident. Property damage pays for the replacement or repair of anything that was damaged. Bodily injury expenses cover lost wages and medical bills. If you cause a major accident, your current or potential coverage may not cover you sufficiently. It is a safe bet to buy more than the minimum required by your state.
Collision
If you’re found at fault in an accident, collision coverage will cover expenses needed to repair your vehicle. Collision coverage is usually the most expensive component of an auto insurance policy, although it isn’t required. Insurance companies might proclaim your car a “total loss” if the repairs exceed the market value of the car. When this occurs, the insurance company will pay you the actual cash value, minus the deductable. From there your car is off to an auction where it will be sold for parts or scrap.
Depreciation
Decrease in value because of age/wear on vehicle.
Actual Cash Value (ACV)
The value of your car when it is damaged or destroyed. Insurance companies figure the ACV by subtracting the depreciation from the replacement cost.
Comprehensive
Comprehensive coverage will pay for damages to your vehicle that were not caused by an accident. This includes fire, vandalism, theft, natural disaster, and even animals. Depending on the damage, the insurance company will pay the cars worth right before the incident. This is also optional coverage.
| THINGS THE INSURANCE COMPANIES AND AGENTS DON’T TELL YOU: |
1. You can triple your Personal Injury coverage for about $10 per year. Hum, do I want $50,000 of medical/work loss coverage or $150,000? Even a MORE important question is – why did my current agent or company not talk to me about this? I think you know that answer, right.
2. Do I have rental coverage when I rent a car on vacation? DO I have to buy that EXTRA expensive insurance from the rental car place?
