Learn the Coverage Characteristics of Auto Insurance

The coverage characteristics of auto insurance are pretty basic. However, sometimes the terms can get a bit tricky. To find the best car insurance rates, you should familiarize yourself with each one. This will allow you to increase your comfort level.

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When you begin the task of shopping for auto insurance, you will need to build a list. It is important that you purchase the correct amount. Each state has specific requirements. This means your needs and the mandates must match. You do not want to fall into the uninsured/underinsured motorist group.

The Insurance Research Council showed a decline in the number of uninsured motorists between 2003 and 2007. However, the number spiked to 14.3% during 2008. In 2009, the number dropped but only slightly, to 13.8%.

Unfortunately, this number is increasing. Today, approximately one in seven Americans does not carry the correct amount of car insurance coverage. Too little car insurance is also a problem. That is why the auto insurance providers group the two in the same category.

If your coverage does not include things like medical protection, the consequences are grave.

The costs will come from your own pocket. A car accident is the fastest way to damage your finances. If the injury is severe, you may suffer a great loss. This can take years to overcome.

With the turn of the economy, people things are looking up. Many believe that car insurance will once again become a priority. However, until the statistics prove otherwise you will need to protect yourself.

The Minimum Amount of Car Insurance

In every state, the lowest level of coverage is bodily injury liability with property damage. Ironically, many consumers believe this is all they need. Bodily injury and property damage keeps you under the law. It may not be enough, however. Most new cars cost more than $10,000 or $15,000.

You also need to understand the way limits work. The state minimums are usually very low. They are between 10/50/25 or in some cases even lower. If you are in an accident, you receive 10,000/50,000/25,000. The first payment is for each person. The second is per accident and third is property damage.

Costs are rising everywhere, including healthcare. Your basic coverage may not take care of severe injuries. You may need to stay in the hospital. Surgery may be required.

Passengers receive money for their injuries too. What if they are extensive and lose too much time away from work? How will you provide restitution? These are all serious questions you must ask yourself. It is a major responsibility to own a vehicle. It takes good decisions when choosing auto insurance coverage.

Suppose you damage someone’s property, rather than injure him or her personally? The repairs may exceed $25,000. Consider the materials and construction crew’s rates. Before you know it, the $25,000 is gone. Your financial obligation takes over. A number of people live paycheck, to paycheck. Any savings you have may quickly dwindle.

This is why you should make sure you select the correct limits. Most experts recommend a minimum of $100,000 for your per person payout. The amount per accident should be at least $300,000. Finally, property damage should be at least $100,000. This would read as 100/300/100 on your policy. Be prepared to see an increase of a maximum of 10% in your annual premium.

According to a press release by the National Association of Insurance Commissioners, less than half of all Americans have strong knowledge in these areas. Approximately 45% have a good understanding of auto insurance. This means 55% have a low confidence level.

One way to combat the lack of knowledge is to take advantage of available resources. InsureU is a great place to start. This is a consumer-based website that provides many tips. After reviewing the information, you should be in a better place.

Uninsured/Underinsured Motorists Coverage

This level of auto insurance is not mandatory in every state, yet. However, with the rising number of uninsured or underinsured motorists, it can become law quickly. When considering this level of coverage, it is important to know a few things.

Your limits are just as important as the liability limits. Your liability coverage protects against certain damage, but it will not pay for everything. If the driver does not have insurance, you receive compensation through UI/UM coverage. It also protects your passengers. Medical costs and funeral costs are included.

You only receive payment for an accident if you are not at fault.

If you cause the accident, your liability coverage kicks in. This level of coverage does not provide compensation for legal bills. If you are required to report to court, liability takes effect.

Collision

Collision is a good option, but it is not mandatory. You do not have to add this to your policy. However, if you are in an accident you may wish you did. That is because collision pays to repair your car. Unlike liability which covers the other persons car.

Liability only will not fix your damaged bumper. Collision is just for your car, not property. If someone hits you and your car hits someone else, collision is not useful.

This is another area where limits are vital. Think about what you stand to lose. Can you afford to pay for a new car? Is your car under a finance contract or lease agreement? If so, you had better check with the bank before you decide. They may expect you to protect their investment. After all, it belongs to them until the final payment.

Collision only pays up to a certain amount. This is important to know. If the damage exceeds a certain amount, the car insurance company cuts the loss. This means they list your vehicle as totaled. Your auto insurance provider will not pay more than the value.

Since vehicles depreciate, it is a good idea for you to review their worth annually.

Try Kelly Blue Book. This is the same guide the car insurance companies’ use. As your car ages, you should remember to decrease your deductible too.

The average deductible for collision begins at $250. Most agree this is too low because your premium may be too high. The simple fact is the higher your deductible amount, the lower your rate. If you can afford it, try to increase the amount. Go for at least $500 to $1000. This will keep your rates stable.

Comprehensive

Comprehensive is a great partner to collision. This level of coverage also pays for certain damages. Theft, vandalism, flood, fire and other non-accident issues is what comprehensive protects.

Some states even allow free windshield replacements. Places like Safelite Auto Glass is one of the major companies that specialize in this service. They will come to any location and provide you with a free repair if you have comprehensive auto insurance.

Comprehensive auto insurance also requires a deductible. Most consumers match their levels with their collision coverage. This helps keep balance in the premium. The same rules apply for this deductible. Your car insurance company pays up to a certain amount.

Personal Injury Protection (PIP)

Personal injury protection is not mandatory in all states. However, you need to know the tort laws. Tort refers to the limitations on lawsuits. History shows a number of lawsuits from car accidents. Many were excessive and unnecessary. As a result, some legislators repealed at-fault laws.

Full-tort and limited tort options are available in all no-fault states. If you reside in a no-fault state like Kentucky, your rights are different. To date, there are 12 no-fault states. In a no-fault state, PIP is required. This level of coverage provides you with protection if an accident injures you. The tort limits affect the amount of money you receive.

It does not matter where the fault lies. Most basic PIP coverage begins at $10,000 for each person involved. If you want to purchase more, you can. In addition to medical protection, PIP takes care of lost wages. To receive your payment, you must pay a deductible. Most states limit the PIP deductible between $250 and $500. It should not be higher than the liability deductible.

Extra Car Insurance

Car insurance extras include levels like, auto rental reimbursement and towing options. If your vehicle suffers a mechanical breakdown, you have protection. This is a great benefit. Many customers opt out because of the other roadside assistance programs available.

If you do not belong to any motor club, however, you can choose this optional service. Most times, your rates will not suffer a huge blow. This is true for auto rental reimbursement as well. It is a great convenience.

There are countless times when you will not have your car. It is not only for accidents. Your vehicle may have a manufacturer recall. You may need replacement parts.

If your do not have your vehicle for a couple of days, you may need a rental. Instead of paying the expensive daily rate, you may not have a charge at all. Most plans allow for a certain type of car. The reimbursement amount is usually between $25 and $50 per day.

The good news is your car insurance provider stays current with the rental companies. When they raise their prices, the auto insurance company adjusts your compensation amounts.

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