If you’re like me, you enjoy comparative shopping and finding the best deal possible. In many areas, the amount of options a person has to choose from can be overwhelming and confusing. High Definition Televisions come to mind. Insurance is not different. The numerous options and plans for all types of insurance can be a complicated mess and selecting the right insurance plan for your vehicle is no less complex.
Depending on what your state requires by law for insurance coverage, you may or may not want to add certain packages to your insurance policy.
We’ll start with the most common form of vehicle insurance. Liability.
Most states, at the least, require this type of insurance. Liability insurance has two plans but we’ll get to those later. The bare bones coverage under Liability covers bodily injury or property damage that the policy holder may be charged with.
Most companies set a fixed dollar amount that they will cover. That price, of course, varies by company and by region of the country you live in. You can also up that amount. This will increase your monthly payment however.
The gist of Liability coverage is this. You pay a fixed amount in case you run into a fire hydrant or in case you hit someone and cause bodily harm to them.
Combined Single Limit
This allows you to combine both bodily injury and property damage into one policy.
The other option under Liability. This splits maximum payments into three categories. Person, accident and property damage.
The next type of insurance coverage is Collision. Collision coverage covers damages and repairs to your vehicle in the event of an accident. If your car is totaled, your policy will cover the value of your vehicle. If you’ve got an old croaker on its last mile, you probably don’t need to pay for this since you’ll probably be paying more for the coverage than your car is actually worth.
So you’re probably wondering if Collision and Liability insurance covers things like oh, say, a tree limb or maybe an unfortunate wild animal collides with your vehicle. What if you head out to work one morning and your car is gone, stolen?
These incidents are not covered by Liability and Collision insurance because they’re not accidents involving other drivers or property.
However, Comprehensive coverage can be quite expensive and while installing tracking devices or GPS locators on your vehicle can decrease the amount you may pay, it still costs a pretty penny. Especially if you’re on a tight budget.
The gist: It’s great if you can afford it but if you can’t or if you’re car is easily replaceable, I would skip it.
Personal Injury coverage is a bit spotty in availability so check around locally to see if your state offers this coverage. Personal Injury is a type of coverage that is highly recommended by most agencies and companies. After an accident, depending on your coverage, you may have large medical bills. This is where Personal Injury coverage comes in.
The Gist: If your state offers this coverage, definitely check in to it.
Uninsured/Under-insured Motorist Protection
If you get what you pay for, opting to add this type of coverage is WELL worth it. As I mentioned above, most states have laws in place that mandate auto insurance but this can be quite problematic as most of these laws are minimalist. Meaning a driver is often not required to have more than Liability coverage to meet the state’s law requirement.
If you find yourself in an accident with someone who has only Liability or, even worse, is breaking the law by having no insurance whatsoever, Uninsured Motorist Protection steps in where Liability steps out. If a driver with limited or no insurance coverage is found to be liable, you may end up on the short end of the stick. This type of protection steps in to cover you in this event.
The Gist: DEFINITELY opt to add this type of coverage.
Last but not least, we come to Gap Insurance. Many are not aware of Gap Insurance but this type of insurance is extremely valuable if the value of your vehicle is less than what you still owe. In the unfortunate event that your vehicle is totaled in an accident, Gap Insurance covers the difference.
The Gist: As most insurance companies only cover what your car is currently valued at, Gap Insurance is worth the extra money if you owe more than your vehicle is worth.