Understanding Different Types of Auto Insurance
There are so many different types of auto insurance! How is a consumer supposed to know which one to get? The truth is that all insurers function the same way. They’ll provide bodily injury and property damage coverage for your vehicle, if you meet the policy requirements. Basically, they just differ on what other things they cover and how much they cost.
The most important thing you need to look at when comparing car insurance quotes is the deductible. The higher your deductible, the lower your premiums will be. So, for example, if your deductible is $250, and your insurance premiums are $300 per month, you’ll pay less than you would have paid if your deductible was only $50.
The other main feature that you should keep an eye on when comparing auto insurance quotes is the deductibles for bodily injury liability. These are what most people think of when they think about auto insurance. They are accidents where the policyholder is truly at fault. If you're involved in an accident and it costs more than the deductible amount, then your rates will increase because of your own uninsured or under-insured motorist coverage (UM/UIM).
Many states require a different amount for bodily injury liability, so you may choose not to carry it at all. You can save a lot of money by doing this. If you do need to carry bodily injury liability, then you can talk to the insurance company about lowering your rates if you have another policy with them that has higher coverage amounts than the state requires. If you already own car insurance, then ask if they will give you a discounted rate on the UM/UIM portion of your policy.
The final component that is important to take into consideration when comparing auto insurance quotes is uninsured motorist coverage (UM). This covers injuries to people in your vehicle caused by someone who has no insurance, but it will not cover normal wear and tear.
Just like the bodily injury liability component of your policy, most states only require a certain amount for uninsured motorist coverage. If you have a higher level of coverage than the state requires, then you can lower your rates with the insurance company. Ask if they’d take out the UM coverage and make up for it with an extra UM/UIM policy that has more coverage than what they require.
If you have another policy with the insurance company, then ask if they will give you a discounted rate on the UM/UIM portion of your policy. If they don’t, then ask if they would be willing to take out the UM portion for a higher amount.
Understanding Auto Coverage
In order for an auto insurance policy to pay for losses that may occur as a result of an accident, there must be sufficient coverage. There are two forms of coverage: bodily injury liability and uninsured motorist coverage (UM). The following points should help you make an informed decision about what kind of auto insurance coverage you need:
Bodily Injury Liability Coverage (BI) pays for injuries caused by an accident. It may also pay for the injuries a policyholder causes to other people. It will not pay for the cost of an injury sustained by someone in his own vehicle during an accident, or by someone who is walking or riding a bicycle.
Uninsured Motorist Coverage (UM) pays for injuries caused by a driver who has no insurance coverage. UM coverage is important if you have substantial assets like a home and savings accounts. If you don’t have this kind of coverage and are injured in an accident caused by someone without insurance, then you have limited recourse against that person’s assets and no coverage to protect your own valuable assets or income.
Uninsured Motorist Coverage (UM) is required in some states, but many states do not require it. In those states where UM coverage is required, there are generally two kinds. Non-owners or non-liability coverage pays for the injuries you cause to others in your car if your car is being operated as your policy requires it to be. It will not pay for injuries caused to occupants of another vehicle during a crash or to pedestrians in crosswalks by an uninsured driver who causes an accident.
Under-Insured Motorist Coverage (UIM) pays for the medical expenses of people injured as a result of an accident that was caused by you while driving without any insurance or enough insurance to cover those medical expenses. It is required in all states. It pays for the injuries caused by an under-insured driver, not a driver who is uninsured or who has no insurance to cover those losses.
Auto insurance companies have many different policies that provide different levels of protection. These policy options include liability, collision and comprehensive coverage and personal injury protection (PIP). The following tips may help you determine what kind of auto insurance coverages you need:
Liability Coverage
Income Protection This pays the policyholder's income while he is off work recovering from an accident.
The maximum amount of money that may be paid is the amount of income he would have earned while attending school were it not for the injury.
This income protection will continue to pay as long as there are not other losses. If there are other losses, then the insurance company calculates how much income was lost and pays that amount plus any loss in future wages.
Property Protection This pays for damage to a vehicle or other property caused by an accident in which you or a member of your family caused another person’s injuries or death. It will also pay for damages you cause to someone else's property while protecting your own property rights.
The coverage will cover the cost of rebuilding or replacing damaged property, repairing any damage that you caused to someone else’s property, and paying for the loss of profits.
This coverage will continue to pay as long as there are no other losses. If there are other losses, then the insurance company calculates how much property was lost and pays that amount plus any loss in future profits.
Collision Coverage
Collision coverage pays for things such as your own vehicle's repairs or replacement after an accident it incurs. It will also pay for damage that you cause to another person's vehicle.
Conclusion
When looking at the rates for auto insurance, it is important to think in terms of premiums rather than premium costs. This is because with autos, the cost of repairs will exceed the premium. Also, take into consideration that other factors such as the year a car was made or its make and model may play a role in determining auto insurance costs.
Don't forget about other expenses related to an accident either, such as court fees for traffic tickets or legal costs if you are sued by people involved in an accident you caused. Lastly, don't be surprised if your auto insurance policy requires that you also have medical payments coverage and personal injury protection (PIP) coverage on your policy too.