Auto Insurance Explained for Dummies

June 19, 2013

Having auto insurance explained in clear and simple terms can be helpful. This article will provide you with an overview of car insurance basics so you know what type of coverage you need as well as what various insurance terms mean.

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Liability Coverage - This is a must have and usually a requirement. Most states require every licensed driver to carry a certain level of liability insurance. Liability coverage pays for any damage that you inflict on other drivers in an accident. Bodily injury coverage is responsible for injury or death that you cause while property liability covers vehicle and property damage.

Bodily Injury Liability - This type of liability insurance covers the cost of any injuries or the death of a person as a result of an accident you cause. A few examples of coverage would be medical bills, loss of income, hospital bills and pain and suffering damages that are accessed. In the event you are in a accident which eventually ends in a lawsuit it is important to have enough liability coverage to handle any judgment. Bodily injury insurance only covers the victims of the accident. Your own medical bills will not be covered. It is extremely important to carry enough liability coverage because you will be responsible for any damages that exceed your insurance policies limits.

Property Damage Liability - Property damage liability insurance covers damage that you and your vehicle do to another persons property. While this mainly covers damage to other peoples cars, it also covers fences, shrubs, tree's and houses. Property damage liability is not usually required by states but is important type of insurance to have. Repair bills can quickly add up if you are not carrying enough property damage liability. As with bodily injury this insurance covers the other persons car, not damage to your vehicle.

Comprehensive Coverage - Comprehensive covers damage done to your vehicle and any vehicle that you happen to be driving. It only covers damage caused by incidents, not collisions. Included would be things such as damage to your car if it was stolen, or in a flood or fire. Check your policy to see what is covered. Lower your premiums by carrying a high deducible on this coverage.

Collision Coverage - Collision insurance pays for the cost of damage to your vehicle when you have an accident with another vehicle or your car is hit by someone else. If you are driving a low value vehicle it is probably best to drop this coverage. The cost of the insurance can end up being more then the vehicle is worth. Again, keeping your deducible high will reduce the premiums.

Uninsured and Under-insured Coverage - This will cover the cost of repairs if you are hit by someone who doesn't have any insurance or is under-insured. This type of insurance comes in both liability and collision.

This covers the basic auto insurance info as well as the coverages that you need to carry. While auto insurance can be expensive and a bit of a hassle it will be well worth it when you get in an accident.

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Related Questions and Answers

Is Property Damage Liability Necessary for Insurance Coverage?

The majority of states require a driver to carry property damage liability. The requirements are often fairly low, in the $10,000 range. Which would be insufficient if you were in a serious accident that damages someone's property. Property damage liability covers the cost of repairs to things such as houses, fences, yards and other structures. It is best to check with your local DMV in regards to the guidelines and requirements of your particular state. Even if property damage liability is not required, it is a good idea. Damages can quickly add up if you are in serious accident.

Is Comprehensive Car Insurance Worth the Extra Cost?

The best comprehensive car insurance really depends on the value of your vehicle. If you are driving an older, low value car, then comprehensive is probably a waste of money. In many cases, the cost of the premiums will exceed the value of the car. Comprehensive insurance covers you in the event that your car is damaged from incidents other than an accident. An example would be flooding or a fire that destroyed the vehicle. This type of coverage is required if your vehicle has a loan against it. The bank or finance company will require you to carry full coverage.

Do You Get Fined or Arrested after a Car Accident if You have No Insurance?

Getting into a car accident with no insurance usually leads to a ticket and a fine. It will vary depending on the state you live in. In most cases, if you provide proof of insurance at your court date, the ticket will be dropped or the fine greatly reduced. This is assuming this is a first offense. If you have been caught driving without insurance more than once, the fine will be higher, and you will have to get a SR-22 from an insurance company proving you have insurance. In most states, an SR-22 is in effect for 3 years and if you drop your insurance or miss a payment, the insurance company must notify the state. They will immediately suspend your license.

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