What You Need to Know

Most people spend time researching before they buy the car that meets their needs. When they go to buy car insurance, they should also invest some time researching how to buy the right car insurance policy that meets their driving and lifestyle needs. This prevents them from spending money on coverage they don't need, or not having enough coverage to ensure they're adequately protected.

It doesn't take long to understand the basics of car insurance to the point where you can feel confident that you're choosing the right auto coverage that also fits your budget. The following are the six categories of a typical auto insurance policy, which provides you with the information you'll need when shopping for auto insurance.

Liability:

  • The liability clause in your policy protects you if there is an accident that is your fault, and which results in an injury to someone else and/or damage to property. Since every state in the country has its own liability rules, make sure you know what your state requires.
  • Example--if your policy includes a liability limit of $100,000/$300,000, the break-up is as follows:
    • The car insurance company will pay up to $100,000 towards any one person's medical expenses.
    • $300,000 is the limit for all medical expenses for everyone in the accident.
  • Liability coverage does not cover injuries or damages to your own vehicle.

Property Damage:

  • This is the total amount your car insurance policy will pay for any property damaged that is deemed your fault.
  • Most car insurance policies have a property damage limit of $100,000, which you may increase for a price.

Comprehensive:

  • This form of insurance coverage is the one that pays for damages to your car that happen for reasons other than a collision, including theft, storm damage, fire and vandalism.
  • This coverage will have a deductible attached, and the rate of the car insurance coverage goes down as the deductible goes up.
  • This insurance coverage will be required on any loan you may have on the vehicle.

Collision:

  • This pays for damages done to your own car in the event that the accident is your fault.
  • If your vehicle is totaled in an accident, the car insurance company will pay the actual cash value of the vehicle.
  • However, the cash value amount of the vehicle may not equal what you may still owe on your car loan. If you are purchasing a new car, you'll want to ask your agent about GAP insurance that does provide you with this added coverage.
  • As with comprehensive coverage, collision coverage is also required by finance companies on any car loan.

Uninsured/ Underinsured Motorist:

  • Uninsured and underinsured motorist coverage compensates you in the event of an accident that is not your fault and when the other party has either no insurance or not enough insurance.
  • Statistics show that there are thousands of drivers who do not have car insurance, so it's smart to protect yourself with this type of coverage.

Whether you've had your auto insurance coverage for some time or you're planning to buy a new or used car, it's important to understand the basics of car insurance so you can have peace of mind on the road.

See how easy it is to get the right insurance policy - get your free auto insurance quotes today.