Auto Insurance

Liability

The most basic type of car insurance, liability is the coverage most states now require you to have by law. Most states require you cary a minimum amount of liability insurance. These minimums can be found at your state’s insurance board.

This insurance is basically designed to pay for damage or injury you cause to others and even covers legal fees if you’re sued. But the minimum amounts required by state laws are very low considering the prices of todays automobile prices. A smart person will buy much more liability insurance than is minimally required in your state. Remember how high hospital emergency rooms are nowadays, and don’t forget how much it cost you to replace your wife's fender last year when she ran over the curb and hit the garage. I personally have found that collison and coprehensive rates are lower if you have higher liability, but im sure this varies from company to company

Collision and Comprehensive

These kinds of insurance help protect you against damage to your vehicle. Although you won’t collect more than your car’s actual cash value (not its replacement cost ), you will at least be able to either get it fixed or make a down payment on something else. To keep your premiums low, choose a higher deductible of $500 or $1,000, but be prepared to pay it before even thinking the insurance company will do their part.

Comprehensive is the other half of these famous oft-coupled coverages, and it covers nearly everything else – outside of being caught in a military battle or nucler war– that could happen to your car that don’t occur as the result of a wreck. A tree falling on your car for example. Like your collision insurance, comprehensive coverage will only pay you what your car is actually worth, and the deductible rule applies here as well. Comprehensive is also noted as one part of the “full-coverage” policy almost any lender will require you to have before they finance your car. I have found deductibles can be much lower for comprehensive insurance without increasing the cost much.

Medical, PIP, and No-Fault

Often called “MedPay” in insurance jargon, medical coverage is what pays your physician and hospital bills if your hurt. Not having to worry about medical expenses also takes a huge load off your mind if you’re already totally stressed from being in a wreck, and what’s really nice is that with this coverage, it doesn’t matter if it was your tiny error in judgment that caused the accident or of that fool driving the other car who can’t tell the difference between the brake and the gas pedals. If it was the other driver’s fault, your insurance company may very well seek to recoup their expenses, however.

Expanded forms of medical coverage, such as Personal Injury Protection (PIP) and other “no-fault” coverages, may or may not be required in your state. Again, surf on over to your state’s board of insurance to check it out. These expanded features offer compensation for childcare and lost wages, so this coverage is definitely worth considering. You may choose to not purchase any more than the state-required minimum for PIP or MedPay coverage or you might choose not to buy it at all if you’re not required to do so by your state laws. If you happen to already have terrific health insurance and disability insurance, you may decide, hey, to heck with that type of coverage. But do remember that MedPay will pay medical bills for passengers other than your family, unrelated drivers of your car (who have your permission to drive), and funeral expenses; the other insurances won’t. So consider this option carefully.

Uninsured/Underinsured Motorist

Being run over by a hit-and-run driver or a driver who doesn’t have any insurance can ruin your week, unless you told your agent to sign you up for uninsured motorist (UM) coverage. A lot of states are also making UM a requirement since the number of uninsured drivers seems to be increasing daily. Or, to be more charitable, maybe it’s the number of people just too poor to be able to afford insurance coverage that’s getting bigger.

Underinsured motorist coverage (UIM) is another pretty important coverage. This pays out when the driver who slams into you has coverage, but the ensuing damage is more than his coverage can handle. This can be important since many states have a minimum liability insurance amount of $15-$20,000, far less then many cars now cost.

Minimum amounts of UM/UIM are smart to keep because if the person hightails it after hitting you, at least you will get some pain-and-suffering compensation.

Because it is always up to each individual to pick and choose insurance coverage, be sure you give all these coverages some serious thought . And please don’t think this is an exhaustive study on all the insurance protection available out there; that would be a thousand-page, eight-pound tome no one would read, just use to press flowers. But don’t be afraid to ask your agent questions about all the different kinds of auto insurance and whether or not any would be beneficial to you – answering those questions is in his/her job description. And be sure to read that policy when you get it.

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