Most states mandate basic personal auto insurance, which offers you some financial security should you be involved in an accident. But is that enough? What other forms of auto insurance are common? What are the differences between basic and non-basic coverage?
Basic coverage is required by all states as a minimum requirement. It covers both you and any other drivers or passengers in your car or truck, and pays medical costs if you are injured in an accident. It also pays for damage to the insured’s vehicle in cases of hit-and-run accidents, and covers the legal costs related to filing a claim in the event of an accident. This type of auto insurance also usually includes uninsured motorist coverage, which reimburses the driver who was in the car at the time of the accident for injuries sustained.
With this coverage, you have a little protection in case you are not at fault in an accident, but you are paying for it nonetheless. If you are at fault in a accident, however, this coverage will not pay you anything. You’ll need to shell out the remainder of the premium on your own. An understanding auto insurance policy often shows the premium in dollars because you will often be asked to deduct your deductible. Understanding how this works can help you save money in the long run.
The other type of basic auto insurance coverage is what’s called ” Gap insurance.” In many states, this is a requirement. It is designed to protect you in situations where the cost of auto insurance goes above and beyond the amount of coverage you have purchased. “Gap” insurance policies don’t pay anything if you’re insured through another company, but you do get a discount if you are covered through the same company. This type of auto insurance coverage is often used by people who have a life insurance policy with a major carrier. The discount for gap coverage is ten percent.
Another type of insurance that’s required in many states is minimum amount of liability coverage. This minimum amount of coverage protects you in situations where you are responsible for damage caused by an uninsured driver. Although uninsured motorist laws vary from state to state, you may find that your insurer does require you to carry at least the state minimum amount of liability coverage.
Most people think that collision insurance deals with damages to your car or its engine. However, this coverage does more than this. With this type of insurance policy, you are protecting your financial protection against the costs associated with a car accident. This includes costs such as repair costs, which are treated as your responsibility and not the fault of the other driver.
Collision coverage may also include payment for towing or storage, depending on the policy. If you own a truck or SUV, you may need to carry a higher deductible in order to afford the higher levels of coverage. A high deductible will be paid up front, and the cost of repairs and towing will be borne by your insurer.
It’s often said that you can’t drive your car legally unless you have collision coverage. What many people don’t realize, however, is that liability only covers the other driver, not you or your passengers. Liability coverage may not protect you in the event of a car accident. In fact, if you are at fault in a vehicular accident, even just one person injured, you will still be held personally liable for the costs associated with their medical care and loss of income. Car insurance will help you avoid these costs. In some states, the liable party is automatically sued for the medical expenses and lost wages of those injured in an automobile accident, regardless of whether they are insured.