Auto Insurance Coverages
December 31, 2009 by Rachel Burgess
Filed under Insurance
Buying auto insurance need not throw you into fits of confusion. By understanding what your needs are and what coverages are available to you, you will be able to choose the right policy.
Liability Cover – Liability coverage is the minimum auto insurance covered required by law in most states. It is intended to cover the victims of an auto accident that is deemed to have been caused by you. Your own bodily injuries or property damage is not usually covered by liability insurance.
Comprehensive Coverage – Comprehensive coverage is intended to cover damage to (or the loss of) the insured vehicle resulting from causes other than collision such as storm damage, theft, vandalism and fire.
Collision Coverage – With collision coverage, your auto insurance company pays for damage to your car if it is involved in a collision with another vehicle or with a stationery object, no matter who is at fault.
Uninsured/Underinsured Cover – Uninsured driver coverage covers your medical expenses and those of your passengers (and in some states property damage as well), in an accident caused by a hit-and-run driver, a driver with inadequate insurance, or a driver with no insurance at all.
GAP Cover – When you buy a new car or even a fairly new used car, it’s vale will depreciate by at least 20% when you drive it off the lot. So, on a $30,000 car your auto insurance company will only pay out $24,000 at the most in the event of it being stolen or totalled, yet you will still have to pay off the $30,000 loan. If you have GAP cover than you will be able to recover the $6,000 difference.
PIP Personal Injury Protection – PIP (also known as no-fault), covers medical and funeral expenses and lost wages of the driver and passengers in the insured vehicle no matter who caused the accident.
Pay-Per-Mile/Pay-As-You-Drive. Unlike the usual type of auto insurance policies that charge a flat rate based on time periods, Pay-Per-Mile coverage is based entirely on the distance driven. The distance is measured via a tracking device that the auto insurance company fits to your car.
Auto insurance policies are usually a combination of coverages. For example comprehensive and collision cover are quite often combined under the title ”full coverage”. Whatever the terminology, it is always best to seek further advice before purchasing your policy.
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