Car Insurance Coverages – What Are They?
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. Collision coverage is intended to cover losses to your car when you are involved in a collision with another car or with a stationery object.
Uninsured/Underinsured Cover. Uninsured and underinsured driver coverage protects you when the negligent driver has no auto insurance or insufficient insurance. In most sates this only covers bodily injury, and not property damage.
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 – A fairly new type of coverage is Pay-Per-Mile. It is so new that it is currently available only in a few states. Basically you pay auto insurance based on the usage of your car. The less you drive, the less you pay. The downside is that in order to benefit, you have to allow your auto insurance company to put some form of tracking device in 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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