Beginner's Guide to Auto Insurance
Knowing the basics of auto insurance is an important part of finding the right policy. If your policy doesn't work for you, then you are overpaying no matter how little you are paying. Use this guide to understand if what you're getting is really what you need and if it is worth the money.
Coverage: The terms, conditions, and situations under which an insurer will pay for injuries and damages. This includes the level of coverage—the maximum amount of money an insurer will pay.
Deductible: Money paid out-of-pocket by the insured when claims are filed. This is the amount of money you pay yourself when you ask the insurer to cover some damage or injury.
Policy: The complete account of agreements between you and your insurance provider. This is essentially your entire contract: premium, coverage, deductible, etc.
Premium: The fee you pay each billing period to keep your auto insurance active. You must pay this regularly in order to keep coverage. Otherwise, your policy lapses. This is based on several factors of risk.
Liability: Coverage for when the driver of your vehicle is at fault for the injuries, death, or property damage to those in another vehicle. The insurance company pays up to the level of liability coverage you have, plus they will defend you in court if you are sued. This means you have a defense against those attempting to force you into paying medical costs, hospital costs, wages lost, and more.
Every state in the union requires some level of liability coverage.
Collision: Any damages to your own vehicle resulting from a car crash or traffic collision are covered by Collision. Your vehicle will be repaired up to the coverage limit or replaced, no matter who is at fault.
Other vehicles are not covered.
Collision coverage is especially useful if you dispute fault, are at fault, or if the person responsible does not have the coverage needed.
Buy up to your vehicle market value in Collision coverage.
Comprehensive: This coverage is for non-driving damage to your vehicle. Should it suffer damages or destruction from storms, wildlife, natural disasters, hit-and-runs, vandalism, war, etc., you are covered. Theft is covered as well.
Medical Payments: Anybody injured in the insured vehicle will have the coverage level of assistance from the auto insurance company. Funeral costs are included.
Uninsured/Underinsured Motorist: This auto insurance coverage helps when the person causing the collision does not have the coverage to reimburse you for damages and injuries.
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Why You Absolutely Need Auto Insurance
Auto insurance is there to protect you legally and financially. Compare quotes to get it cheap.