Buying Auto Insurance for Dummies!

Car insurance is important but picking the right coverage can be confusing to new car owners. You need to understand all types of coverage to be able to use and save money wisely.

Liability Insurance

This insurance is a requirement everywhere unless your state offers other options (e.g. posting a surety bond of a certain amount), and if you take the option, you have to purchase a liability insurance.

This covers damages to another person’s property and injuries suffered by another in a car accident. Each state authorizes own liability insurance requirements and they don’t require you to carry more than $100,000 bodily injury coverage and $25,000 property damages coverage per accident. However, on more serious accidents, that may require more money. The worth of your personal assets should reflect the amount of liability insurance you need, but experts agree you need no less than $300,000 bodily injury protection and $100,000 property damage protection.

Further Kinds of Auto Coverage

After applying for the liability insurance, try considering the following optional coverage types:

·         Collision Coverage- covers collision damages of your car.

·         Comprehensive Coverage – covers vehicular damage due to vandalism, theft, natural disasters and weather conditions.

·         Uninsured or Underinsured motorist coverage-covers damages in an accident with an uninsured-or insufficiently insured-driver.

·         Personal injury protection (PIP) - covers any medical expenses when the other driver’s liability insurance policy is insufficient. It is required in several states and is also called as No Fault Insurance.

Practically, the options above are mostly reasonable if your car is expensive, you live in a highly populous city or you often drive in heavy traffic. If you don’t fit in any of these factors, then you likely don’t need the additional coverage. 

On Buying Enough Car Insurance

These are the recommended amounts on purchasing each coverage type according to insurance experts:

• ·         $250 deductible for collision insurance. The real price of coverage depends on the worth of your vehicle.
• ·         $100 deductible for comprehensive insurance. The real price of coverage depends on the worth of your vehicle.
• ·         $300,000 of bodily injury uninsured motorist coverage.
• ·         $100,000 of property damage uninsured motorist coverage.

On PIP coverage, majority of providers have a limit to what they will pay out. Be sure to inquire first about the limit of this type as providers won’t specify it in their insurance policy.

Getting an Insurance Quote

It’s wise to compare car insurance policies either online or contacting your states Insurance Department. 

Also do the following:

• ·         Don’t purchase unnecessary coverage as it may increase your premium.
• ·         Assume a higher deductible
• ·         Be wary of discounts which you might be eligible.