Auto Insurance Explained
Auto insurance refers to an insurance policy for protection against those losses/liabilities which are to be incurred on account of traffic accidents.
Need for purchasing an auto insurance policy
Even though accidents might not occur during the lifetime of many individuals, no one can actually rule out the possibility of such an occurrence at any point of time. Preparing oneself sufficiently for a mishap or an accident will allow an individual to drive completely stress free even in the most treacherous of roads.
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An accident is not always the result of one's own carelessness. It can even occur due to another driver's fault on which you have no control. Accidents can also result on account of hazards of wild animals, storms or a tree falling off. If an individual has not taken an auto insurance policy, the damage repairing may cost several thousands of dollars which the individual will have to bear on his own and will have to do the entire running about independently to get the car in perfect condition. On the other hand, a person having an insurance coverage will have the auto insurance company working with repairmen as well as hospital and others who are involved in the quick and satisfactory resolution of the problem. No wonder, in a lot of areas, auto insurance coverage is a must for maintaining a license or registering a vehicle.
Different types of auto insurance coverage
Basically there are six types of auto insurance protection available. These are:
- Liability coverage which includes Property Damage Liability and Bodily Injury Liability. The bodily injury liability offers coverage in case of claims of bodily injury from those injured in a particular accident. The property damage liability gives coverage for such property damages related to the third parties. This may include another individual's car which you may damage.
- Medical payments coverage which includes the policy owner as well as other passengers in the car owned by the policyholder who may have suffered on account of the accident.
- Uninsured or underinsured motorist coverage that offers protection to you in case the negligent driver has no or insufficient insurance.
- Physical damage auto insurance coverage which includes collision and comprehensive. Collision coverage takes care of the losses to the vehicle in case you are involved in the collision. Comprehensive coverage takes care of the majority of non-collision related physical damages to the car, may be due to storm, or windshield breaks etc.
Generally, about one-third of the premium amount usually goes towards collision and comprehensive coverage. You should consider buying collision coverage for replacing your car and also select the greatest deductible available. In such a situation where you have an old car, you may eliminate collision coverage fully. Bodily injury coverage is dependent on the assets you hold. Majority of the states makes it mandatory to have $50,000 every injured party as well as $100,000 each accident. You must purchase a minimum $5000 worth of property damage coverage, as dictated by most states.
Having a well-planned auto insurance policy will certainly add to your mental peace.