It is very important that you should be aware of the various types of auto insurance coverage that are available to you. Only when you are completely informed can you make the relevant choice – for you. It goes without saying that auto insurance is of the utmost importance to every vehicle owner and to safeguard yourself and your car, it is of paramount importance that you make the right choice.Auto insurance, is meant to protect owners of cars against the risk of financial liability in case of accidents resulting in property damage or physical injuries to those involved. But the level of motor insurance needed varies from state to state: some require a minimum level of insurance; some, like Virginia, do not require car insurance but the uninsured vehicle pays a fee to the state; New Hampshire and Mississippi offer car owners the option of posting cash bonds. As you may be aware, “the privileges and immunities clause of Article IV of the U.S. Constitution protects the rights of citizens in each respective state when traveling to another.” This mandate is upheld by the various clauses that make up the basic structure of auto insurance. Generally, it would be safe to say, that car insurance is critical, if not mandatory, in most parts of the States and around the world. Before you take out a policy, do your homework. Thoroughly. Find out the different types of coverage you need to have, which ones fit your budget and then contact an insurance agent as soon as you plan to purchase or lease a vehicle. There are no “one size fits all” plans. Every driver has different needs which is why you must take the time to get the right plan for yourself. There are various types of car insurance. So which one do you need? Then again, what are the regulations in your state that drive your selection of the most suitable insurance for you and your vehicle? How do you buy the most cost-effective vehicle insurance? How do you save money? How can you decide on the right amount of coverage? All these are very important questions and require a fair bit of homework to be done before choosing the right car insurance…for you! We also suggest that, as over time your circumstances and requirements change, you will need to add to, or subtract from, your coverage. Let us briefly walk you through the main types of auto insurance you need to consider to get the right level of coverage.
- Bodily injury liability: A cover for injury and death claims, as well as legal costs, made against you should your car hurt or kill someone
- Property damage liability: In case of your car damaging any property, this type of coverage protects you. Since liability insurance protects the owner of the damaged property, it is required in 47 of the 50 states
- Medical payments: This coverage recompenses medical expenses for yourself and other occupants in the car in case of injuries. In a number of States it’s optional. In “no-fault states”, medical payments are replaced by personal injury protection as part of your basic coverage
- Uninsured motorist protection: This provides protection against injuries you or the occupants in your car might suffer, caused by uninsured or hit-and-run motorists. You could also opt for “under insured” coverage which covers claims you may make against drivers with inadequate insurance in some states. It may surprise you to learn that in some states, as high 30% of drivers are not insured!
- Collision coverage: Covers damage to your car up to its book value. If you are involved in an accident, collision coverage will pay for the repairs to your car. In case your car is a write-off (generally this means that the cost of repairs exceeds the value of the vehicle) collision coverage will recompense the value of your car. In case of older cars, it may not be worth-while carrying collision coverage since the value of the car may be less than the premiums paid out. But for new or expensive cars, collision coverage can help you get back to your original status quo. Collision coverage carries a deductible, which is the amount per claim you have to pay before the insurance takes effect. The lower the deductible, the higher the premium. Please note, that if you are a lien-holder, this coverage is mandatory.
- Comprehensive (physical damage): What if something happens to your car that is unrelated to a covered accident – Such as weather damage, hitting an animal, car theft - will your insurance company cover the loss? Liability insurance and collision coverage cover accidents, but not these situations. These situations are covered by Comprehensive (other than Collision) coverage. It also carries a deductible. Comprehensive coverage is one of those things that is great to have if it fits in your budget. Anti-theft and tracking devices on cars can make this coverage slightly more affordable, but carrying this type of insurance can be costly, and may not be necessary, especially if your car is easily replaceable. Note: If you are a lienholder, this coverage is required.
- Gap insurance: This is highly recommended for people with car loans or have car leases, for whom gap coverage can be very valuable. If your car is declared a total loss, you will be reimbursed the value of your vehicle (at the time of the total loss resulting from the accident) using your comprehensive or collision coverage. Generally, there is a difference between the current market value of your car and the amount owed on the car.