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Explaining Car Insurance Coverages: What You Need to Know
by Megan L. Mahan
When it comes to buying car insurance, it's important to have an
idea of what you'd like to be included in your policy--otherwise
you're more likely to be talked into purchasing more coverage
than you need. And increasing your auto insurance premiums is
probably something you'd like to avoid come renewal time.
So take a look at the coverage details below and keep in mind
that an educated consumer is a powerful consumer!
The Basics
Nearly all states require you to carry auto insurance to protect
you and other motorists on the road. Included in your auto
insurance requirements are coverages in the forms of medical
coverage or bodily injury and property damage.
Medical liability coverage pays for any damages to other
motorists injured or in an accident for which you're at fault.
This coverage can be used to pay for medical bills, lost wages,
as well as any legal fees you might face.
Property damage liability, as the name suggests, pays for
damage you cause to other vehicles, as well as public or private
property such as fences, buildings or road signs.
But how much coverage should you have?
Every state sets its own minimum coverage amounts. For example,
in Arkansas, the state requires motorists to carry a minimum of
$25,000 in bodily injury coverage per person, $50,000 in bodily
injury coverage per accident and $25,000 for property damage.
These limits are traditionally presented in the
Cars at up to
90% off the book value!
format:
25/50/25. This is the format you will see as you compare
coverage amounts.
And while minimum coverage limits vary from state to state, most
insurers would strongly advice that you carry more than the
minimum amounts, especially when it comes to liability for
bodily injury. The Insurance Information Institute has
recommended that motorists carry $100,000 for bodily injury
coverage per person and $300,000 in bodily injury coverage per
accident.
Ultimately, the decision of how much liability coverage to carry
is up to you. Be sure to ask your insurer how much your premium
will go up by selecting higher coverage amounts--typically it
will only add a few dollars to your monthly bill!
Other Coverages
In addition to the coverages required by your state, there are
other protections you can add to your policy to maximize your
protection. The most common added coverages include collision
coverage and comprehensive coverage. Collision coverage
pays for damage to your car resulting from a collision with
another car or object. It can be added to your policy for an
added fee and typically carries a deductible. A
deductible is the amount that you pay out-of-pocket when filing
a claim before the insurer assumes financial responsibility.
If you financed the purchase of your car, it's possible that
your lender will require you to carry collision coverage until
the loan is paid off.
Additional tip: If you see your premium
Get a free brand new car!
inflate after
adding collision coverage, increase your deductible to see it
fall. Just make sure you select an amount you can pay for if you
have to file a claim!
Comprehensive coverage pays for damage to your car
resulting from anything other than a collision. This could
include anything from theft and vandalism to weather-related
damage from floods or tornadoes.
Like collision coverage, if you financed the purchase of your
car, your lender might require you to carry comprehensive
coverage. You will also need to select a deductible, which will
is likely to increase your premium.
Additional tip: After your car loan is paid off or the
value of your car drops to under a couple thousand dollars, you
can drop collision and comprehensive coverage and see a hefty
drop in your auto insurance rates.
Special Services
In addition to beefing up your coverage, you can also add
special services into your auto insurance policy.
Many insurers now offer rental car coverage, which
protects you from damages if you're in an accident while renting
a car. Towing services may also be added to your auto
insurance policy for an additional fee. If your car breaks down
or you have an accident, the towing company affiliated with your
insurance company may tow your vehicle free of charge.
Windshield replacement coverage is another coverage which
has grown in popularity in recent years. If your windshield is
cracked or shattered,
the coverage will pay for the windshield
to be fixed or replaced. Some insurers are now using windshield
replacement as an incentive--the cost to repair a chipped
windshield is much less expensive than replacing the whole front
window.
Additional tip: Check your benefits and coverages in your
car warranty and auto club membership to avoid doubling your
coverage on special services!
Applying Lessons Learned
Now that you know the popular coverages included and added to
auto insurance policies, you will have a better understanding of
what your insurer offers you, why he or she makes certain
recommendations and how to get the most out of your car
insurance policy. Use these tips in combination with careful
insurance shopping to find cheap car insurance with
great protections!
About InsureMe
InsureMe links agents nationwide with consumers shopping for
insurance. Specializing in health, life, home, long-term care
and car insurance quotes,
the InsureMe network provides thousands of agents with insurance leads every
year. For more information, visit InsureMe.com.
About the author:
Megan L. Mahan is a copywriter and insurance expert based in
Denver, Colorado. She holds degrees in French and English from
the University of Iowa and lends her writing and editing
expertise in print media and Internet communications through her
informative articles.
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