Understanding Car Insurance

While buying car insurance is a common occurrence, you would be surprised at the number of people who really have no clue about what they are buying. This is due primarily to the fact that few people understand car insurance and exactly what it entails. As Paulette Kirby wrote in to tell us from New Orleans, "For years, I've settled for a raw deal when renewing my car insurance policy. However, I was lucky enough to come across a consultant who explained to me the basic types of car insurance. After that, I was amazed how much easier buying insurance had become."

So in this article, we seek to put all of you in Paulette's position by helping you understand car insurance by explaining certain fundamental car insurance categories. To begin with, buying car insurance can often be a strain on the household budget, especially if you are buying teenage car insurance. Second, every state has different liability requirements, so things can get confusing. In such situations, you have no choice but to upgrade your knowledge of what car insurance entails.

To help you understand car insurance, we have divided the article under six broad headings, covering the six concepts that are at the core of all car insurance policies. The categories are listed in terms of importance:

Liability: The liability clause in your policy protects you in case you cause an accident that results in injury to someone else and/or damage to property. Since every state in the USA has its own liability rules, make sure you know what your state requires. To give you a fairly typical example, if your policy includes a liability limit of $100,000/$300,000, the break-up is as follows: up to $100,000 is what the car insurance company will pay towards any one person's medical expenses, while $300,000 is the limit for all medical expenses for everyone in the accident. In no case, remember, will liability coverage pay for injuries or damages to your own vehicle.

Property Damage: This is the total amount your car insurance policy will pay for any property you damage once it is determined that you did indeed cause the damage. Typically, most car insurance policies have a property damage limit of $100,000, which you may increase for a price.

Comprehensive: Now we're talking, many of you would think. This form of insurance coverage is the one that pays for damages caused to your car owing to various reasons, including theft, storm damage, fire and vandalism. Naturally, this coverage will have a deductible attached, and the rate of the insurance coverage goes down as the deductible goes up. This coverage will also be required on any loan you may have on the vehicle.

Collision: Collision coverage pays for damages done to your own car in case an accident is reckoned to be your fault. So if your vehicle is totaled out in an accident, for instance, the car insurance company will pay the actual cash value of the vehicle. However, in many cases, this would be less than the worth of your car. As with comprehensive coverage, collision coverage is also required by finance companies on any loan against your vehicle.

Uninsured/ Underinsured Motorist: Uninsured and underinsured motorist coverage compensates you in the event of an accident that is not your fault and the other party has either no insurance or not enough insurance. Hard as that may seem to believe, there are thousands of drivers who refuse to carry insurance, so you need to protect yourself on that score.

Don't wait. Let us find you the right car insurance, home insurance, health insurance, life insurance or long term care insurance—today!