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Insurance Overview: Auto Insurance
By Molly's Brother | August 15, 2006
This is the fourth post in my “Insurance Overview” series.
Although most of us are required–by our different state laws–to have auto insurance, I wonder how many of us know what the ins-and-outs of our policies are. In continuing with my “Insurance Overview” series, I thought I would delve in and explore the different types of auto insurance policies, what they means, and–in a later post–factors that can lead to lower rates.
Different Types of Auto Insurance
Liability insurance covers for the damages you cause to another person or another vehicle as the result of an auto accident. Types of liability insurance include:
- Bodily Injury covers all claims for injury or death (and the cost of a legal defense) in the event that you injure someone as a result of your legal liability.
- Property Damage pays for damage that you have caused to someone else’s vehicle if you are legally responsible for the accident. This does not cover the cost of repairing your own car.
- Medical Payments covers the cost of medical and funeral expenses in the event that you–or passengers riding in your car–are killed or injured in a car accident regardless of fault. It also covers you and your family members (as pedestrians or passengers) in case of injury as the result of a car accident.
Physical Damage covers damages to your car, repair costs, and the cost of a temporary replacement vehicle.
- Collision covers damages to your car regardless of fault. You will pay a base amount to fix your car (a deductible). Anything over that deductible the insurance company will cover. If you increase your deductible–i.e. the amount you pay towards the repair of your car–it will lower your insurance premiums.
- Comprehensive insurance covers damage to your car as a result of (almost) anything else. Damages caused as a result of theft, fire, vandalism, or floods (among other things) are all covered under comprehensive insurance. Again, by increasing your deductible you can lower your premiums.
Other Types of Insurance
Uninsured/Underinsured coverage is somewhat self-explanatory. You are covered for the damage to your car if the other driver who caused the accident is either uninsured or underinsured.
Other policies cover loss of use, loan/lease payoffs, and roadside assistance. As always, do your research. This post is to serve as a helpful starting point in navigating the chopping auto insurance waters.
On Thursday, be sure to catch “Insurance Overview: Ways to Lower Your Auto Insurance Rates.”
Topics: Insurance |