Alright, I admit it. Auto insurance is enough to cause anybody to get a little pink in the cheeks. Insurance can get downright confusing, as there are many different variables within the policies as well as your driving record and circumstances, that will determine which type of insurance fits you best.
First off, you need to put on your thinking cap and take a few minutes to understand the different kinds of auto insurance available to you and the reasons behind each one.
Did you know that if you are labeled ‘high risk’ and had your license suspended due to driving uninsured or being convicted of drunk driving, that you will need to acquire a special insurance called SR22? This is essentially a document that your insurance provider will forward to the state, verifying that you have valid minimum liability coverage. With this, your license suspension will be lifted and you will be able to drive again.
It often seems like there is so much insurance information that tends to cloud the facts. So for now we’ll keep it simple.
With that said, these are the main types of auto insurance policies:
Personal Injury Protection
This is medical coverage for injuries to either yourself or someone from the other vehicle after a car accident. With PP your medical bills are paid regardless. This ‘no-fault’ insurance is mandatory for every driver in ‘no-fault’ states.
This insurance has two parts. The first is medical for things like doctor fees and medical bills, along with equipment. The next is the reimbursement for anything not medically related, like child care or lost wages.
Liability Insurance
This insurance pays for any injuries or damages to the other person and their property. In most states this is the minimum insurance that a driver must have.
As well, liability coverage pays for a lawyer if you are sued. The two types of liabilities covered are for bodily injury and personal property.
Uninsured Motorist Coverage
This insurance will reimburse you for the damages caused by an uninsured driver. Obviously the driver has no liability coverage and hence this insurance will take care of your damages. Of course it doesn’t cover the uninsured driver at all. They are basically on their own.
Underinsured Coverage
This policy covers the damages caused by an underinsured driver. Meaning this policy will take care of the limits between their policy and yours. With that said, your policy has to be higher in order for this policy to be of use to you.
Collision Auto Insurance
This insurance will cover the damages to your vehicle, whether the fault is yours or the other driver.
Comprehensive Insurance
This policy covers damages to your automobile that is not from a collision. Examples would be fire, theft or even vandalism by a domestic farm animal.
Thoughts For Choosing
Your policy choice is strongly dependent on your state’s minimum liability coverage laws. Most people opt to go with the ‘cheapest’ insurance they can find, but often that’s not a wise decision.
It is important that you understand each of the options available and that you are protected fully for your particular situation. Paying a little more now might just be worth your while, when the tiger sneaks up behind you and decides to strike. It’s up to you as you’re in the driver’s seat.
Know what your auto insurance options are and you’ll have one less thing to worry about when you hit a pothole, in the always enthralling game of life.
July 11, 2011
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Tags: Auto Insurance, Coverage, liability, policy
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