Saturday, January 19, 2008

Types of Auto Insurance Coverage Explained - Liability, Comprehensive, Collision, PIP, Uninsured

When looking at auto insurance there are many types of coverage’s to choose from. All protect from different things, so picking the right coverage s for your needs is a very important issue. Some are required (liability) and some are optional (collision, uninsured), and we will discuss each one to help you make the best decision when purchasing your coverage s. Liability Liability insurance is the main type of insurance and in most states and provinces, and it is the law that you must at least have a minimum amount of liability insurance. Liability does not cover you directly, but it protects you from the financial loss that can come as the result of an auto accident. Liability coverage will cover the medical expenses and property damage that you cause as a result of your driving when you are found at fault for an accident. In the United States it can be broken down into two separate aspects of property damage and bodily injury, and bodily injury does not cover injuries to you. You cover the injuries you receive; you will need another form of medical insurance that we will discuss later (PIP). In Canada the two aspects are grouped together as liability and it does cover injuries that you incur as the result of the accident. In both countries there is a minimum amount of auto insurance that you must have, and it differs by state and province. You can increase these minimums and it is recommended to do so, because if the damages exceed your amount of liability, then you are fully liable for paying the difference, which could end up being several thousand dollars! Comprehensive Comprehensive insurance covers only your car, and is not mandatory. It covers damages to your car that are not caused by other motorists. These damages include, fire, theft, vandalism, and damage from acts of God, such as ice storms, tornados, hail and floods. It also covers you if you hit a deer, or other animal. There is a deductible that goes along with this coverage to help prevent fraudulent claims. This deductible can be set at $250, 500, or $1000 and you must pay this to the insurance company before they settle your claim. The level of your deductible will affect your premium. Collision Collision coverage covers your car when you are involved in an accident that is your fault, whether you hit another motorist, or and object (light pole, mailbox). This coverage will go towards repairing your car, and as with comprehensive there is a deductible that can be set at $250, 500, or $1000. The deductible amounts will affect your insurance premiums and this insurance is not mandatory. Personal Injury Protection (PIP insurance) PIP insurance is only present in the United States, and is mandatory in some but not all states. PIP insurance covers injuries to you, and the states in which this coverage is mandatory are known as no-fault states. They are labeled no-fault because, regardless of who was at fault for the accident everyone s injuries are covered. Uninsured Motorist Uninsured motorist insurance covers you when you are involved in an accident in which the at-fault driver does not have insurance. Rather then you having to waste the time and money of taking this individual to court to collect for your damages, your insurance company covers your damages. However, the uninsured motorist does not get off the hook, as the insurance company usually will take them to court in order to be reimbursed for what they paid out. This type of insurance is mandatory in some states but not all, and can be added on to insurance policies if you wish. In close, there are many types of insurance options to choose from when setting up a policy. Hopefully now you have some insight to what these polices cover and whether you would benefit from having these policies. For more information visit auto-insurance-knowledge.com/auto-insurance-comprehensive-coverage.html

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