Understanding Auto Insurance Coverage
Even though everybody who owns a car has an auto insurance policy few of us are acquainted with the intricacies of auto insurance coverage. Unfortunately not knowing what the fine prints in our policies mean may lead to higher premium rates and unsatisfactory coverage so read on if you are keen on understanding auto insurance coverage.
Since forty seven states require you to have some form of auto insurance coverage it is imperative that you understand what is mandatory and what will offer you the added protection that you are looking for. When shopping for an auto insurance several factors come into play such as the type of car you own, the amount of money you want to spend and your driving and credit records. An auto insurance policy is actually an amalgamation of several types of insurance coverage. It is common to come across the following terms when you talk about auto insurance.
Collision: A coverage that pays for damage caused due to accident or collision with another vehicle
Liability: The coverage paid in case of damage to a vehicle or injury to a person
Comprehensive: This type of coverage damages resulting from a host of factors such as theft, natural calamities etc.
Medical Coverage: This coverage pays for the medical expenses of the accident victim.
Personal Injury Protection (PIP): This coverage pays for physical injury to the driver.
When you are shopping for an auto insurance policy it may include some or all of these types of insurance coverage. The types of coverage you opt for should depend on your insurance needs. The first thing to consider should be the mandatory coverage required by the State Laws. Most states will require you to have liability insurance. This is a basic third party coverage that pays for damages to property, vehicle or injury caused to another driver by you. Fifteen states require you to also have Personal Injury Protection.
The next step is to analyze your personal needs for instance do you really want to purchase coverage for a rental car, or do you need an extended warranty on car parts and labor. The next consideration should be the amount of money that you are willing to spend based on your needs and the mandatory state laws. After analyzing all these aspects; you can put together the different types of coverage in your auto insurance policy. If you feel that you don’t need a certain coverage mentioned in your auto insurance policy, talk to your insurance agent about it because it may affect your premium rates.
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