Car Insurance – The Basics
There is a good chance that you are spending hundreds, possibly thousands of dollars on your car insurance annually. Please take a moment and think about what percentage of your income is allocated to car insurance premiums, and now you understand how crucial it is to educate yourself with some basic knowledge of car insurance and proper coverages. This article is not meant to be a detailed breakdown of your specific policy, but has the purpose of assisting you in being more informed the next time you make decisions about your car insurance coverage. After reading, please do yourself a favor and review the specifics of your current auto insurance policy.
Worst case scenario, you are driving your car, you cause an accident that results in major injuries to yourself and the other persons involved in the accident, as well as significant damage to both vehicles: Are you confident that your car insurance policy has adequate coverage for the damages, potential hospital bills, and possible legal fees? By maintaining the proper coverage and limits on your policy you may be able to eliminate or reduce the risk of major financial catastrophe.
After blindly paying premiums year after year, do you not feel that you owe your family as well as yourself to be fully educated about car insurance so that you can confidently select the best coverage and insurance company for your next policy.
Liability Coverages
When it comes to your financial well being, coverages for liability are one of the most important aspects of your car insurance policy.
With the ever increasing chance of car accidents, destruction of property, and the soaring cost for medical care, the minimum liability limits set by state law may not be sufficient. It may be seriously detrimental to your financial security if you only carry the minimum coverage for liability on your auto insurance policy.
Liability for Bodily Injury
When this type of coverage is combined with property damage liability coverage, it becomes the core of of any car insurance policy and is in many situations a requirement of state law. If bodily injury claims or legal actions are brought against you and if an investigation or a court finds you to be the responsible party for injuries to persons, your bodily injury liability insurance will cover expenses, up to your policy limit, as well as for injuries to other people involved. In addition, bodily injury liability coverage will provide your legal defense against those claims or lawsuits, if necessary.
Although it varies by state, bodily injury coverage may not cover your own medical expenses. Injuries to you and your family may be covered more adequately by the medical payments coverage.
Lets examine the few differences for limits of bodily injury liability coverage. The different limits of coverage are given as options to satisfy various levels of coverage. If you are found to be the responsible party in the event of a auto accident with multiple people injured, in your vehicle or another, or if there is even one major trauma or death, the state required minimum coverage may not be adequate. The primary objective when choosing limits of any liability coverage should be to obtain coverage that would equal the NAV (Net Asset Value) that you have available and the potential loss in the situation of inflicting damage to other parties. A generally good rule to follow is that you consider and obtain higher liability coverage limits than the state mandated minimum.
Liability for Property Damage
If you examine this type of coverage when combined with bodily injury liability coverage, it in effect becomes the core of of any car insurance policy and is in many cases also required by state law. In the event that property damage claims or legal actions are brought against you and if a formal investigation or a court discovers that you are liable for property damage, your liability coverage for property damage will cover, up to your policy limit, the expenses related to the replacement or repair of items such as the other parties vehicle, other property such as a fire hydrant, or possibly even real estate. In addition, liability coverage for property damage will pay for legal fees against claims and other legal actions if a necessity. However, this type of liability coverage will not pay for any damages relating to your own property; your property would be covered under an optional product for comprehensive and collision coverages.
There are differences in the limits of liability coverage for property damage. The different limits of coverage are given as options to satisfy various levels of coverage. If you are found to be the responsible party in the event of a auto accident with multiple people injured, in your vehicle or another, or if there is even one major trauma or death, the state required minimum coverage may not be adequate. The primary objective when choosing limits of any liability coverage should be to obtain coverage that would equal the NAV (Net Asset Value) that you have available and the potential loss in the situation of inflicting damage to other property. A generally good rule to follow is that obtain higher liability coverage limits than the state mandated minimum.
Each state has mandated a specified minimum limit for liability coverage relating to property damage.
Liability for Medical Expenses
This type of liability coverage is optional and will cover up to the policy limit per individual, the medical expenses incurred with no regard to fault, for you and the parties in your insured vehicle for injuries obtained due to a vehicle accident. It also has the added feature of protecting you and your family members that reside at your household if they obtain injuries while in another vehicle or struck by a vehicle as a pedestrian. Any and all necessary and reasonable medical expenses will be covered within a specified time period written within your auto insurance policy. This type of coverage can be particularly valuable if you do not maintain any health insurance, because medical expenses will be paid during an investigation before the determination of liability.
Excess Medical Payments Coverage:
This type of optional coverage differs from the standard coverage for medical payments because it will only cover the medical expenses that are deemed reasonable and necessary, up to the policy limit, that are not covered by another source, such as health insurance (not including Medicare) or another person’s auto insurance. This coverage pays up to the policy limit per person for medical expenses as outlined above, with no regard to fault, if you or the individuals in your insured vehicle obtain injuries. This coverage also has the added benefit of protecting you and your family members that reside at your household if they obtain injuries while in another vehicle or struck by a vehicle as a pedestrian.
This optional coverage was created to be complementary to your current health insurance due to the fact that most policies for medical insurance have co-insurance and/or deductible provisions and is in most cases cheaper than the typical coverage for medical payments.
Coverage For Your Car
Comprehensive Coverage:
This type of coverage is optional and would apply if your vehicle is damaged by theft, windstorm, vandalism, fire or even you are in an accident with an animal. This coverage will pay for the repair costs for your vehicle, or if declared a total loss will pay the fair market cash value, minus the deductible. Comprehensive coverage will not pay for standard wear and tear or other mechanical issues. If you have financed your vehicle the primary lien holder may have required you to obtain comprehensive coverage.
Other types of optional car insurance policy coverages include collision coverage, rental reimbursement coverage and uninsured motorist coverage.
For more detailed information relating to your auto insurance or for car insurance quotes please contact your local independent insurance agent for a review of your own policy.
*The limits and coverages differ by state
24 Seven Insurance was formed to help consumers find the highest value free insurance quotes available. At 24SevenInsurance.com, we strive to make the process easier for consumers that want to find the best possible insurance coverage at the lowest possible rates.
