Simple Answers To
Your Questions
Auto insurance is
for your protection, providing
the financial resources to deal
with harm to you and your auto,
avoiding catastrophic losses and
shielding your assets from
liability if you are at fault in
an accident. Regardless of
where you live, there are common
elements of standard auto
insurance.
Limits of
liability
If you are liable
(at fault) in an accident, the
liability components of your
policy protect you against bodily
injury and property damages
caused to third parties in the
accident, including legal bills.
You and other family members
covered in your policy are
considered first parties. Your
insurance company is the second
party.
Liability coverage
limits are commonly expressed in
two ways: single limit and
split limit. A single limit
is the maximum an insurance
company will pay for all third
party bodily injuries and
property damage. A split
limit is expressed as a series of
three numbers, such as 100/300/50.
The first number, 100 ($100,000)
equals the maximum third party
bodily injury coverage per person.
The second number, 300 ($300,000)
equals the maximum total third
party bodily injury coverage per
accident. The third number,
50 ($50,000) equals the maximum
amount payable for damage to
property of others. Some
states have established minimum
levels of liability coverage
you must purchase. But
these minimum levels, although
legal and inexpensive from a
premium standpoint, are rarely
sufficient for any household with
assets to protect.
Collision and
comprehensive
Collision coverage
pays for damages to your vehicle.
The maximum amount of collision
protection is usually limited to
the depreciated value of your
auto, which is not the same as
the auto's replacement cost.
Collision coverage is
normally the most expensive
component of auto insurance.
If you can afford it, you can cut
your premiums by selecting
coverage with high deductibles,
say $500 or $1000 for example,
meaning that you pay this amount
of collision-related repair costs
and your insurance pays the rest,
up to the determined value of
your vehicle. Comprehensive
coverage pays for non-collision
damages to your auto, including
theft, glass breakage, vandalism,
animals, falling objects, and
natural disasters. Check
with your agent about deductibles.
Remember, payment
is made for what your auto is
currently worth (it's market or
"book" value), so it's
helpful if you have a rough idea
of this amount. This
knowledge can help you determine
the best deductible for your
policy. The National
Automobile Dealers Association
publishes the Official Used Car
Guide, which is updated each
month. Many public
libraries have copies.
Medical payments
Pays medical
expenses for people covered under
your policy ("first party"
expenses). These expenses
can stem from accidents in your
auto, accidents in other vehicles
driven (with owner permission) by
you or other family members and
auto injuries when you or family
members are pedestrians.
These payments are made
regardless of who is at fault,
but your insurer may seek to
recover the loss from the other
party if that party is liable for
the accident.
Personal injury
protection (PIP) and broader
"no fault" coverages
are expanded forms of medical
payments protection that may be
required in your state.
Even if not required, such
coverage is frequently offered.
Expanded features include lost
wages and payments for child-care
and other services you would
normally perform (but are
temporarily unable to) due to
injuries caused by an accident.
Underinsured and
uninsured motorists
Underinsured
coverage pays for injuries if you
are hit by a driver who's bodily
injury limit is not sufficient to
pay your medical bills and is
lower than the amount of
liability insurance you carry.
Uninsured coverage pays for
injuries if you are hit by a
driver with no auto insurance,
and includes injuries from a
hit-and-run motorist. Costs
are relatively little and these
coverages are required in many
states. Uninsured and
undersinsured property damage
coverages are also available.
Discounts
Discounts are made
available depending on certain
factors. A good driving
record, plus auto safety and/or
security features help reduce
premiums. Most companies
offer a discount when you place
both your auto and home insurance
with them.
Add-on features
Several
supplemental auto coverages are
available, either as separate
premium items or included in
augmented policies. Here
are some examples:
Rental
reimbursement, a common
add-on, covers vehicle
rentals required because
your auto is damaged or
stolen.
Towing
and labor coverage for
charges in case of a road
breakdown is also common.
Auto
loan/lease coverage, an
add-on that provides
coverage for the
difference between the
unpaid balance and the
actual cash value of the
vehicle (in the event of
a total loss).
Certain conditions and
requirements apply.
Automobile
death indemnity &
total disability is a
relatively new coverage,
and quite inexpensive.
Contact your agent for
details.
What is needed
when applying
You will need
certain documents before an auto
policy can be issued. To
save time and avoid frustration,
it's a good idea to have these
documents ready before you apply
for auto insurance:
==>
Copies of driver's
licenses for all
household members not
insured elsewhere.
==>
Copies of current
insurance policies.
|
