Auto insurance is one of life’s necessities, but it need not be mysterious. Here is a straight-forward guide to the car owner needs to protect his income and his car.
Basically, there are five car insurance coverages. What you must have by law varies from state to state, but any ethical insurance agent will tell you: don’t skimp. Get the best you can afford so that if you are involved in an accident, your fault or not, you are not panicked by the expense of it.
My insurance agent says that the bigger the company, the more policies it writes. That helps keep costs down. So does shopping around via website, phone call to a couple of reputable agents and personal referral from a wise friend or relative.
Here are five types of auto insurance coverages:
1. Liability: Most states require car owners to carry liability coverage in their policies. Check with the Department of Motor Vehicles in your state. This coverage protects you when an auto accident:
- is your fault
- involves another’s property
- involves another’s medical bills
Again, get the best coverage you can.
2. Collision: The law requires this coverage if your car is leased or it has a lien (loan) on it. It will cover repairs or pay the current value of the car if the accident has totaled it–i.e. Damage is so bad it cannot be driven.
3. Comprehensive: This coverage is also necessary if the car has a lien or lease contract. This part of the auto policy kicks in if the accident involves something other than another car. Your vehicle is damaged by a hail storm. A neighbor kid hits a baseball through a window. A tree falls on on the car roof. The car is involved in a fire. This is good coverage to have, but with an older car, check the value with Kelly Blue Book and your insurance agent as the expense may not be worth it.
4. Medical: No matter who is at fault in an accident, medical expenses for you and your passengers are covered. These bills really add up. If it is available in your state, it is worth getting.
5. Uninsured/underinsured: This part of the policy will take care of you when :
- the other driver is uninsured (Yes, it does happen.)
- the other driver is under insured and his policy does not provide for all of your claim
- the other driver is not identified (e.g. a hit and run incident)
So when buying an auto policy, know these different aspects of coverage ahead of time. Look/listen carefully at the websites/agents you consult and pick what will protect you and your assets for the long term.