Photo by Marcin WicharyBuying auto insurance need not throw you into fits of confusion. By understanding what your needs are and what coverages are available to you, you will be able to choose the right policy.
Liability Cover. Liability coverage pays others for damages resulting from a car accident that you cause. It also pays for a lawyer to defend you if you are sued for damages.
Comprehensive Cover. Auto insurance comprehensive coverage covers damages to your car that are not caused by other motorists, including fire, theft, vandalism and storms.
Collision Coverage – Collision coverage, as it’s name suggests, covers damages to your car due to collision with other vehicles, stationery objects and any road obstructions.
Uninsured/Underinsured Cover. Uninsured and underinsured driver coverage protects you when the negligent driver has no auto insurance or insufficient insurance. In most sates this only covers bodily injury, and not property damage.
GAP Coverage – We all know that there is a sharp decline in the value of a car immediately after purchase. This means that any loan you took out to finance the purchase of the vehicle could be many thousands of dollars greater than the amount your auto insurance company would pay out if your car was stolen or became a total loss following an accident. Gap cover or loan/lease cover as it is also known is intended to bridge that gap in valuation and the amount you owe on the loan.
PIP Personal Injury Protection – PIP (also known as no-fault), covers medical and funeral expenses and lost wages of the driver and passengers in the insured vehicle no matter who caused the accident.
Pay-Per-Mile – Pay-Per-Mile insurance is a novel approach to possibly saving money on car insurance. With this type of insurance the price of your premium would be directly linked to the number of miles you drive. The fewer the miles, the lower the costs would be. This sounds promising, but it does suffer from two major drawbacks. Firstly it is available in very few states (around 12 at the time of writing) and secondly it involves the insurance company fitting a tracking device to your car.
Auto insurance policies are usually a combination of coverages. For example comprehensive and collision cover are quite often combined under the title “full coverage”. Whatever the terminology, it is always best to seek further advice before purchasing your policy.
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