Finance Tips

Today, most states require car owners to purchase auto insurance coverage. Whether you already have auto insurance or are considering buying some, you may be wondering how much is enough and which types of coverage you need. Here are a few tips to get you started.

A is for auto policy

When you purchase auto insurance, you enter into a written contract with your insurance company. The contract states that you agree to pay a certain amount of money (the premium) and that the insurer agrees to provide a certain dollar amount of protection (coverage limits) for a specified amount of time. Read this policy carefully when you get it, and ask your insurance agent to clarify any terms and conditions that you don’t understand. And remember to review your policy periodically. Your life will change, and so will your coverage needs.

B is for bodily injury coverage

Bodily injury and property damage make up the portion of your policy known as liability coverage.

This is mandatory in most states. If you cause an accident, you may be liable for some or all of the damages. Liability coverage protects you from potential lawsuits by providing coverage to individual(s) injured as a result of your negligence. The amount of protection (coverage) that you choose, beyond state requirements, is up to you. In many states, you can purchase as little as ,000 per injured person and ,000 per accident. However, this may not be enough to adequately protect you. For instance, if you own a home or have any other valuable assets, you’ll want to protect those assets by choosing higher limits. Frequently recommended limits are 0,000 per injured person and 0,000 per accident.

C is for collision and comprehensive

Collision, as the name implies, covers your auto when it strikes an object (e.g., a tree or a telephone pole).

Comprehensive covers your auto against other physical damage that is not covered by collision (e.g., fire and theft). Although these coverages are optional under state insurance laws, that doesn’t mean you should forgo them. Collision and comprehensive can be valuable because they can limit your out-of-pocket expenses.

But if your car has a low resale value (e.g., under ,000), having collision and comprehensive coverage may not make sense–the premium cost may not be worth it if you can afford to pay for repairs yourself. However, keep in mind that dropping these coverages is not always up to you. If you finance your car, your lender may require you to carry collision and comprehensive coverage.

D is for deductible

Think of your deductible as self-insurance. It’s the amount of money that you’re willing to pay out of your own pocket if there’s an accident. You can save money on your premiums by choosing a higher deductible, but watch out–if you get into an accident, you’ll need to come up with that amount before your insurance pays a dime.

For example, say you choose a ,000 deductible. You get into a minor accident, and the damages total 0. You’ll end up footing the entire repair bill, because your insurer pays for damage only above and beyond your deductible amount. But if your deductible was lower, say 0, you would have to come up with only that amount–your insurer would pay the remaining part of the bill, in this case 0.

E is for exclusions

Exclusions are why it’s so important for you to read your auto policy. Most people purchase open peril or unnamed peril policies. These policies cover all risks, except those listed in the exclusions section of your policy. For example, insurers do not cover “willful and wanton misconduct.” This is conduct that is intentional and reckless or in disregard of the law. You don’t want to find yourself in an exclusionary situation, because you’ll be left to pay the bills–both yours and those of anyone you injure.

F is for filing a claim

You’ve been in an accident–now what? You need to notify your insurer. Your insurer will have you fill out an incident report in which you state what happened in the accident. You may also need to give a recorded statement to the adjuster. If you file a claim for property damage, you’ll need to get an appraisal. Some insurers will send an appraiser to you, while others require you to come to them. If you are injured, your insurer will require you to have a physical exam. In general, you can see your own doctor, but the insurer may also ask that you see a doctor of its choosing.

Most insurance policies contain a clause regarding late notice. If you fail to notify your insurer of the accident in a timely manner, the company can disclaim coverage. This means that the insurer will not pay. What is considered late notice? This question continues to be battled out in courtrooms across the United States, so if you are planning to file a claim, the best advice is to notify your insurer as soon as possible.

Insurance is considered one of the most complicated tasks.

People do not try to understand the working procedure behind it and that is why, on face, it looks thorny. However, if one starts from the basics, the clouds can be removed. If you are worried about auto insurance for your car and do not know how to get started then here is help.

It is better to what types of coverage are available for you before you look for any automobile insurance provider.

Every driver must own auto insurance because most of the states have made it mandatory. The insurance policy is decided on certain factors including what kind of automobile you have and what kind of benefits you are looking for.

The first kind of coverage is called the Liability. This is used for paying off the accidental injuries along with property damages to others involved.

The injury damages covered by this policy comprise pain, suffering, lost wages and medical expenses.

The property damages refer to the damaged automobiles and property. It also covers the court costs, if any.

Your state law decides the minimum liability coverage you must have.

Second is the collision auto insurance coverage. It covers the amount for your vehicle’s damages caused to collision with any object or vehicle. Third one is the comprehensive insurance policy.

It is used to cover the amount of the damage or loss of your vehicle in an automobile accident. The kinds of damages covered are losses caused due to theft, vandalism, flood, hail, wind and fire. Next type of auto insurance coverage is the medical coverage.

It is used to pay for the medical expenses irrespective of who is at fault, in case of an auto accident.

Another kind of auto insurance coverage available for you is the PIP. It refers to the personal injury protection that is compulsory in some states.

This kind of coverage covers the amount of medical expenses for the driver, again, irrespective of the fault. Uninsured motorist is another type of coverage that covers the damages of your vehicle hit in an auto accident, caused by a driver without liability insurance.

Under insured motorist is that kind of auto insurance coverage that covers the amount of damages of your vehicle when a driver without sufficient liability insurance is involved in an auto accident. Rental reimbursement is the last type of coverage that pays off for the damages of a rental car damaged in an auto accident.

In most cases, you have to pay allowance on daily basis for the rental car.

You can also find auto insurance policies that are a combination of two or more types of coverage. Before you choose any of the above coverage, you should first understand the laws of your state.

When someone rents a car, the automobile rental companies hold the renter accountable under the rental agreement for damage to their car. They offer a Damage Waiver at an extra cost. This Damage Waiver is not insurance, but a contractual agreement between the renter and rental company. If a waiver is not purchased, it is important to review your own automobile policy to determine if any extension of coverage applies. Also, establish how the liability coverage afforded by your policy applies in the event you are at fault in an accident with the rented vehicle. In California, you are required to have auto insurance regardless of whether you are driving your own car or if you are renting one.

Rental car agencies do provide wide range of auto insurance coverage and it would not be prudent to blindly select rental car insurance as every policy offers its individual advantages under particular situations. You should examine each policy so offered and judge it against the requirements you have. It would be prudent to discuss the policy with the car rental agent, rather than just read the summary over the website.

Sometimes you are not required to purchase any car rental insurance because you are already covered by your car insurance. Usually, your coverage does remain the same with a rented car as it would if you would be driving your own vehicle. Also, you could be covered by auto insurance coverage under your credit cards. You should check with your credit card company about the coverage to which you are entitled.

Before you rent a vehicle, check the financial and insurance obligation you will face, and find out how these would be covered by your own auto insurance. In case you do need to exercise your insurance policy and realize that certain aspect is not currently covered, you should check if it would be covered under other insurance policies.

There’s nothing exciting, interesting or thrilling about insuring one’s car and many of you will definitely agree with that. And taking into account the place you live in it can either be a small piece or a big chunk of your family budget.

The most frequently asked question about vehicle insurance is probably the one about the amount of coverage that should be included. Any professional insurance agent will recommend you getting as much coverage as you can pay for. And while this advice doesn’t lack in common sense it’s practical application is not very different from a realtor’s advice to buy as much living space as you can afford. Logical but quite useless since you don’t get a precise amount recommended for purchase. You have to consider a series of factors in order to make the right decision. First of all you have to learn the local minimum amount of coverage required in your state. Then you have to research what’s that minimum is used for. And in the end you have to analyze what are your exact insurance needs.

What’s the state minimum in the area you live?

The best source to learn state minimum requirements is your state insurance department. Another good source are numerous sites where you can get auto insurance quotes online – they usually post these minimums for your convenience.

State minimums are usually expressed in the following form – 20/40/10, where 20 refers to bodily injury liability for a single person ($20,000), 40 – to bodily injury for the whole accident ($40,000) and 10 stands for $10,000 for property damage.

Is the state minimum enough?

It’s not very hard to determine whether your state minimums are enough to have adequate and cheap auto insurance. Just analyze the medical and repair costs in your area and see if the amounts of basic coverage are enough to cover the costs without requiring you to pay anything out of pocket. In most cases minimum amounts are not enough but it’s not a rule a thumb. If you live in an area with low repair and medical costs it might be just the right sum to carry with your auto insurance policy.

Is there anything else I would need?

There are many types of coverage that don’t make part of the state requirement list you can buy additionally from your provider. On one hand you will pay a higher premium if buying additional coverage with your policy and that’s definitely not a way to get cheap auto insurance. On the other hand, you may need a particular type of coverage if the risk of having that very damage is high in your area. Say you live in a place where floods are common. You would want to buy flood coverage for your vehicle as it doesn’t make part of the standard coverage package.

What are your insurance needs?

This is probably the most important aspect of any insurance procedure. You have to determine what the item of your insurance is and what you really want to protect. Is the exterior of your car really important? Or you are worried about its contents? What about theft? Try to think about the things most important to you in your car and insure namely those things. It’s the most effective way to get just the right amount if insurance coverage you need.

Auto insurance is another name for security of your vehicle. As the name suggests auto insurance is all about insuring one’s vehicle against all kinds of threats for instance theft, accident and other related dangers. The basic types of auto insurance coverage are -

1. Bodily injury liability, which provides coverage for bodily injury claims from the people who might get injured in an accident with your vehicle.

2. Property damage liability covers any property damages to third parties such as another person’s car you damaged or are responsible for.

3. Medical expenses to the policy owner and other passengers in the policy owner’s car.

4. Uninsured and underinsured motorist coverage saves the negligent driver with or without insufficient insurance. In most states, this covers only bodily injury losses while in other cases property damage losses are also included. However it is quite important for everyone to get this coverage because it protects us from all expected as well as uninvited problems. For instance at some places an uninsured motorist caught driving with a suspended license in a car with a revoked registration goes to jail.

5. Physical damage stands for damage to your car that can be through accident or any other means such as collision, storm etc. In this the collision coverage pays for the physical damage caused to a person’s vehicle through collision.

However prior to purchasing an auto insurance policy there are quite a few things, which should be borne in mind. For instance- shop for the best policy available, always ask for high deductibles, check the insurance of the car or any other vehicle prior to purchasing it, coverage of the car varies with its worth, the profile of the company through which you will buy the insurance and last but not the least go with a low cost auto insurance for instance at places such as Santa Clara, San Marino Mateo and Alameda counties low cost auto insurance has arrived at premium rate of $322 and $355 respectively.

Whereas the auto insurance rates are concerned the American Farm Bureau suggests that the insurance rates for a driver should be based on the risk of that the driver should be based on the risk that the driver confronts for having an accident or loss and since rural drivers in the rural areas are less prone to risks, they should not be asked to pay more for their auto insurance.

In California there is a debate over the auto insurance policy rates. While on the one hand due to the rules offered by California Department of Insurance the rates of auto insurance are expected to touch the sky, on the other hand the California Farm Bureau strongly opposes it and claims that the new rates presses rural residents to shell out more money in order to subsidize the cost for urban residents.

However nowadays auto insurance companies are troubled with excess of crime or fraud in this area. Lately in North Carolina thirteen people were arrested accused of staging motorcycle wrecks to collect insurance money. Many such cases are reported in other parts of the world. As a result the government of different countries is looking for ways and means to combat the crime situation.