If you go into an insurance brokerage without knowing some of the coverage characteristics of auto insurance, you’re setting yourself up to pay a lot more than you have to. By doing a few minutes of reading you can educate yourself on the basic terms and features that most auto insurance packages will include. You can also take a peek at what the market rates are so that you don’t pay more than you should. Knowing that you and your vehicle are protected is extremely important, and getting good value for your hard-earned dollar is essential in these tough economic times.
The first thing you should familiar yourself with if you’re looking at some of the characteristics of auto insurance is the idea of a premium and deductible. In fact, these terms are fairly general across the insurance spectrum. The idea of insurance is that everyone pays into a pot that can be paid out to someone in their time of need. The principle behind this strategy is known as spreading the risk, and it basically guarantees that for an affordable amount every month, people can protect themselves against a financially-crippling disaster. This monthly amount you pay is known as the premium. To make sure that people aren’t making insurance claims for every little thing and taking advantage of insurance companies, insurance agreements will almost always include a small part of the insurance settlement be covered by the individual. This amount is known as the deductible. Generally, the relationship between insurance premiums and deductibles is pretty simple – the higher the premium you choose to pay every month, the lower the deductible if you if ever need to make an insurance claim. Trying to figure out the best fit for your financial situation and the best balance between the monthly payments, and the ability to pay a larger deductible if the time ever care is important in the world of insurance.
The next step in familiarizing yourself with the coverage characteristics of auto insurance is to look into what some of the specific types of insurance options are. The easiest part to start with is liability insurance. This is also called “third-party coverage” and is required in order to legally drive a vehicle almost anywhere in the Western World. This insurance covers you if you are held legally liable for causing damage to someone else while operating the insured car. It usually covers damage to a vehicle, as well as medical costs in the case of bodily injury.
The next level of insurance is personal injury protection (PIP). This coverage is usually fairly cheap, and covers any medical payments that you might sustain as a result of an accident that you are responsible for (if someone else was responsible then their liability coverage would kick in). It can also cover any lost wages as a result of your medical treatments.
Now that we know how to protect others and pay for your own injuries it is time to look at what characteristics auto insurance plans offer in order to cover your own vehicle. Basic collision insurance is usually not required by law, but it is almost essential in most peoples’ opinion. This insurance covers your car in the case of a collision if you are at fault (again, if someone else is at fault their liability coverage would cover the cost of repairing the vehicle). If you have collision insurance and you get into an accident that you are liable for, your insurance company will cover the cost of repairs to the vehicle minus what you pay for your deductible.
The final overage that I recommend the vast majority of people look into when insuring their vehicle is comprehensive auto insurance. This package basically essentially covers your vehicle against the myriad of unforeseen events that could damage your property. Some of these include damage from natural disasters, theft, fire, wildlife, or any other number of causes depending on the specific characteristics of your auto insurance coverage.
These are the four main coverage options that it is recommended that everyone get when they purchase insurance. For most people, a vehicle is the second largest purchase they will make in their life. In only make sense to make sure that purchase is protected. If you only purchase the bare minimum of insurance, you are at a risk every time you step behind the wheel of your car because even great drivers occasionally make mistakes and can be found at fault if the matter goes to a judge. It is important to make sure that when comparing insurance plans that a person doesn’t merely look at the bottom line dollar values of the deductible and premiums, but instead compares the specific coverage characteristics for each auto insurance plan. Some plans might give you discounts for including certain types of coverage, while others might reward loyalty or give discounts for insuring multiple vehicles with the same company. Just make sure you are comparing the equivalent packages that each insurer provides before committing to one based purely on dollar value.
There are certain specific coverage characteristics that are unique to special vehicles such as commercial vehicles, antique cars and trucks, or luxury vehicles. Check out our site for more specific break downs and descriptions of these options in addition to detailed strategies for getting the best value for your insurance dollar when you go shopping for insurance coverage. Always remember that you are better safe than sorry, and no one likes to be left with a car that won’t run, and a bill they can’t afford to pay.