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Car Insurance Policy Helpful Tips
Understanding the Basic Components of a Car Insurance Policy
The language of the typical car insurance policy is hard for the average reader to understand. People who are afraid to continually ask questions of their car insurance agents often end up paying for insurance they do not need, while neglecting coverage they mistakenly think they have. There are a few basics we can cover briefly that will give you a head start on understanding your car insurance policy and allow you to ask intelligent questions.
Collision Coverage
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The central part of a car insurance policy is typically the collision coverage. Collision coverage is the part of your car insurance coverage that actually relates to when damage results from your car impacting another car, object, or being. You need to know whether your collision coverage covers just other cars or your car as well. In general, if you have a comprehensive car insurance policy (see Comprehensive Coverage below), it will cover both.
Personal Injury Coverage
Personal injury coverage may be the most important aspect of your insurance policy. Personal injury is where the cost of an accident can decimate your finances for life if you are not properly insured. If there is one part of a car insurance policy that every driver should consider maximizing, it is personal injury coverage.
Property Damage Liability Coverage
The part of your car insurance policy that is mandated in most states is the property damage liability coverage. Minimum state liability requirements are usually just enough to cover the cost of replacing a medium priced family vehicle or small SUV. This amount of coverage will not go very far in covering your liability if you hit a luxury sedan or building. If it is not too cost prohibitive, you may wish to go about twice the state liability requirements or get add-on coverage. Many of the larger, more traditional insurance companies set their minimum liability amounts in excess of the state requirements as a protection for their customers. Discount insurers will typically only cover the legal requirement unless you request additional liability coverage on your car insurance policy.
Comprehensive Coverage
If you buy your car using credit, you will typically be required to purchase a comprehensive car insurance policy. This kind of coverage will pay for repairs to your car or replacement of your car in the event of a car collision or a variety of other accidents resulting in damage to your car.
Deductibles are usually associated with this type of car insurance policy. A deductible is an amount you are required to pay towards any damage to your car before the insurance company will pay you for any additional damage costs. For example, if you have a deductible of $500 and you have damages of $653 to your car, you will have to pay $500 and the insurance company will pay the remaining $153 for your repairs. The higher your deductible, the less the car insurance policy premiums will be.
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