Understanding automobile insurance can save you from potential financial ruin. Losses from property damage, medical and legal costs, and lost income caused by automobile mishaps add up to billions of dollars annually. Automobile insurance plays an important role in protecting consumers from serious financial losses that can result from such accidents.
Understanding automobile insurance and how it works can help consumers to make wiser choices in their driving habits and thus bring down their premium costs.
Understanding Automobile Insurance Policies
Understanding automobile insurance coverage requires first and foremost an understanding of the types of coverage mandated by law. Each state has slightly different automobile insurance requirements and rules, so you should visit the Insurance Information Institute’s web site at www.iii.org to find the specific auto insurance coverage required by your state. See the easiest steps to buy a car insurance.
Understanding car insurance rates is also essential to understanding automobile insurance. Auto insurance rates vary wildly between companies, and quotes can be very confusing, with different coverage provisions and different deductibles among policies.
Understanding Automobile Insurance Coverage
Understanding the different types of automobile insurance coverage and exceptions to coverage can help you determine what you need to protect yourself financial. The major types of coverage can be classified into the following:
- Liability Coverage: Most states require you to carry liability insurance that pays for property damage or physical injury to others that you may cause. Liability insurance protects you in the event that someone sues you as a result of this damage, paying your legal bills as well as any settlement costs. Make sure to carry enough liability insurance to safeguard your possessions from a huge lawsuit
- Collision Coverage: Collision covers repair costs for your vehicle after an accident when you are at fault. To lower your insurance premium, you can consider dropping collision coverage on a car you own if the car isn’t worth much. For example, if your car is worth only $2,000, and you have a $1,000 deductible, it may not be worth keeping collision coverage.
- Comprehensive Coverage: Comprehensive covers most everything else that causes damage to your car, other than accidents and excluded events. Examples of damage covered under this policy provision include damage from theft, fire, vandalism, flooding, and hail.
- Personal Injury Protection: Personal Injury Protection (PIP) pays medical expenses resulting from an accident for you and others riding in your car. It also pays for you or your family members who are injured while riding in another’s car or while walking.
- Uninsured or Underinsured Motorist Coverage: Uninsured or underinsured motorist coverage pays for costs related to injuries or property damage to you or your family members and guests in your car caused by an uninsured, underinsured, or hit-and-run driver. Perhaps if you have a rental car we have the best tips for that too.
Understanding Automobile Insurance Rates
Automobile insurance rates are not only determined by the amount of coverage you opt for, but also by how risky you are to insure. Some of these risks factors you may have no control over, such as your age, your location, and the accident rate in your area. You should know the difference between long and short term insurance coverage. Other factors which you can control include the type of car you drive, the amount of miles you drive each year, your previous claim history and driving history and your credit history.
It is important to remember that when purchasing automobile insurance, you should tell the truth, even if it may raise your auto insurance rates slightly. This is much better than having your insurance invalidated because of untruths.
Buying Automobile Insurance
Understanding automobile insurance coverage can help you to obtain not only cheaper insurance, but hopefully better-quality insurance, which can provide you with the protection you need at a cost you can afford.
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