Now you have finally decided which car to purchase but not sure what type of insurance coverage to purchase. Auto-Talk tries to explain the basics of Auto Insurance. the task requires thoughtful analysis based on price, individual need and personal taste. A basic auto insurance policy safeguards against property damage, liability and medical costs by offering an ala carte menu of separately priced coverage.
- Collision. While not mandatory, this reimburses damage to your car that results from an accident. Collision generally comes with a deductible, as much as $1,000, which you are required to pay up front. If the accident was not your fault (and of course it never is), your auto insurance company might reimburse you for the deductible amount.
- Comprehensive. Reimburses for loss due to theft or damage caused by something other than an accident such as fire, earthquakes, falling objects or getting hit by very large animals such as deer, moose or confused rhinos. This coverage, seldom mandatory, usually comes with a small deductible – although cracked or shattered windshields are often fully compensated.
- Bodily Injury. Covers you, or a family member in case of injury caused to a third party. Adequate liability insurance is essential given the high cost of going to court and, if you’re found liable, paying the ensuing damages. Most states require liability insurance and the experts strongly recommend buying more than the state required minimum – as much as $100,000 per person and $300,000 per accident. Check into umbrella policies which expand coverage and increase compensation limits.
- Medical Payments or Personal Injury Protection (PIP). Pays the hospital and doctor bills and lost wages incurred by the driver, or passengers, resulting from an accident.
- Property Damage Liability. Pays for the damage you’ve caused to someone else’s automobile or property. Does the same if someone was driving your car without permission.
- Uninsured and Underinsured Motorist. Compensates you or a family member if involved in an accident with an uninsured motorist or a hit-and-run driver. Underinsured reimburses you if the driver at fault has an amount of insurance insufficient to compensate you for a total loss.
Before purchasing a car, whether it be new or used, you should understand that sticker price, cost of repair and incidence of theft all factor into your premium amount. When seeking auto insurance, gather recommendations from friends and neighbors, contact the state insurance department about any company complaints and always solicit at least three price quote comparisons.
Many insurers offer discounts if your car has features that reduce risk of injury (such as air bags and anti-lock brakes) or theft (anti-theft locks and alarms). Low mileage, safe driver records and long time customer discounts can save you money, as can insuring with the same company that underwrites your home. Finally, you might consider dropping collision and comprehensive coverage on “Old Betsy”. Experts believe it’s darn foolish to insure a car worth less than ten times the amount paid to cover it.
