Car Insurance Basics

June 18, 2010 by  
Filed under Car Insurance

Car insurance is insurance that drivers can purchase for any kind of vehicle in order to protect against losses sustained in traffic accidents. Different policies will cover different situations and these are explained below.

– Liability Insurance: Liability coverage is the most basic coverage in car insurance policies and is required in most states.  This coverage ensures that if you are the one at fault in an accident, your liability insurance will pay for the physical injury and property damage expenses of any third parties involved. Liability coverage limits are usually conveyed with three numbers.  For example, liability limits of 20/50/10 indicate that there is coverage of $20,000 in bodily injury coverage per person, $50,000 in bodily injury coverage per accident, and $10,000 in property damage coverage per accident.

– Collision Coverage:  In the case that you are in an accident, collision insurance will pay for the repairs that your vehicle requires.  Collision coverage is usually the most expensive coverage that you will have to pay for.  Insurance companies will declare a vehicle “totaled” or a “write-off” if the replacement would be cheaper than the repairs needed.

– Comprehensive Coverage:  This coverage will pay for any damages to an automobile that were not caused by an accident.  Qualifying damages include damages arising from carjacking, vandalism, natural disasters, and hitting an animal.

– No-Fault Coverage’s:  No fault covers you and anyone else that was in the vehicle at the time of an accident.  It will cover your and your passenger’s medical bills.

– Uninsured and Underinsured Motorists Coverage’s:  UM (Uninsured Motorists) coverage will pay for injuries you have sustained if you are involved in a hit-and-run by a driver who does not have auto insurance, and is mandatory in many states.  UIM (Underinsured Motorists) coverage will pay for you if the driver who hit you creates more damage than their liability insurance can cover.

– Supplemental Coverage’s:  Rental reimbursement is an add-on that will cover rented vehicles in case of damage or theft.  Auto replacement coverage ensures that your automobile will be fully repaired or replaced even if the costs are more than its depreciated value.  Coverage for towing and labor covers you in case of an auto failure on the road where towing is necessary.  This supplemental coverage is usually offered as separate items or included in larger policies.

Speak Your Mind

Tell us what you're thinking...
and oh, if you want a pic to show with your comment, go get a gravatar!