Almost all states require some type of auto insurance for its drivers and the days of states that don't require insurance are over.
How familiar are you with the auto insurance policy you have on the vehicle you or your family drives?
Here is a list of terms you should know very well. Make sure that you go through your insurance policies at least once per year as rates may have increased and coverage’s may change.
It’s also a good idea to receive quotes from competitors to the carrier that you have every two to three years. I personally saved about $1,200 per year recently by switching to my new carrier!
Deductible – The insurance lottery term as I like to call it. This is the up front amount you pay for damages to your vehicle. Typical deductible coverage amounts are: $100, $250, $500. Yes, you can carry insurance with no deductible meaning that the insurance carrier will pay for everything to fix your damaged vehicle. Great deal, eh?
Unfortunately, you’ll pay more for your policy if you don’t have a deductible. The higher that amount is, the lower your insured rate will be. Make sure you compare what your payments will be at different rates of deduction.
Full Coverage – This refers to the two main types of auto insurance coverage: Comprehensive and Collision
Comprehensive – This is the insurance that covers your vehicle for everything other than a collision. If your car is stolen and damaged, your comprehensive insurance would pay for any damages. Also, the Mother Nature coverage as in: floods or tree falls. If your engine catches fire and the car is damaged by smoke and/or burning, it’s covered by comprehensive insurance.
Collision – Yes, this is the one that covers you in the big bang, crash, dent, messy thing. If you hit another vehicle or something else on (or off) the road that you don’t like such as a tree, guardrail, or building; the collision coverage would kick in.
Here is an opportunity to save some money. If your car can be labeled a real “clunker” and is worth less than $1,000 in value because of age, mileage, condition, or a combination of those; you may decide not to carry collision insurance. If it’s already banged up, what’s another dent or two, right?
Uninsured Motorist – Oh yeah, they’re out there. Probably more than you think. Unfortunately, people that have a hard time paying their bills, will skimp on or skip insurance coverage. But, you need to carry it so that you (personally) or your vehicle will be covered in case of an accident with an uninsured motorist.
Bodily Injury – More important than fixing the vehicle in an accident is fixing you, your passengers, or those that may have been injured in an accident with another vehicle.
Property Damage – If you join your neighbor for dinner (accidentally) by crashing your vehicle into the side of their house, that’s property damage. This is typically written together with Bodily Injury insurance.
Glass Repair, Towing, Rental – These are less important (and less costly) to carry than the other types of auto insurance categories, but nice to have.
If your windshield cracks and needs replacement, that would be covered by glass repair.
If you’re a AAA member, you get a reduced rate for towing, but it can still be quite expensive so take a look at towing insurance.
I always get rental car insurance as my wife is good for an accident or two every couple of years (don’t tell her I said that), and body shop repairs can take a week or more.
These are the main types of vehicle insurances, so know them well and do compare your rates with other carriers. There’s a lot of competition in the insurance world so make sure you shop around!
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