Types of Automobile Insurance Coverage

automobile accident needing auto insuranceAt this point you’re either shopping around or have your new vehicle picked out and the financing in place. Before you drive off the lot, it’s important to make sure to take care of one last piece of the puzzle:

Auto Insurance

Auto insurance is generally stated as protection against financial loss in case of an accident. This protection includes property, liability, and medical coverage.

This protection can further be broken down into 6 different main parts:

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1) Bodily Injury

This coverage is to cover injuries that you, the driver, cause to someone else. This insurance is required by all states, although the minimum requirement by the state is generally not recommended in case of a large accident.

2) Personal Property Liability

This coverage pays for damages you, the driver, cause to someone else personal property. Typically, this is damage to the other drivers car, however may include fences, light-poles, or other structures damaged in an accident.

3) Personal Injury Protection (PIP)

This coverage pays for the medical attention for the driver and passengers of the driver’s car. This can include medical payments, lost wages, as well as potentially funeral and other costs.

4) Collision

This coverage pays for damages to the driver’s car resulting from an accident. This coverage is an area that can be removed in older cars if one deems that the costs of maintaining insurance is no longer worth it, as the car may no longer be worth repairing.

5) Comprehensive

This coverage pays for damages caused by things outside of a normal collision with another driver. These may include theft, fire, natural disasters, or impact with animals. This is another area of coverage that may be removed with older cars to reduce insurance payments.

6) Uninsured Motorist

This coverage pays for damages caused by a motorist without insurance, or in a hit-and-run situation.

How much coverage should I carry?

This is a common question among people first looking into automobile insurance. The answer to this question will vary from person to person, however all states require a minimum amount of liability insurance for all drivers. This minimum, as stated above is not generally recommended, as most accidents cause larger damage, and being on the hook for the balance after a large accident can leave many bankrupt.

The rule of thumb is normally 100/300/50, or $100,000 individual coverage, $300,000 all passengers coverage, and $50,000 property damage coverage.

Next we cover how to choose an automobile insurance company

Posted on November 17, 2011 by in Automobiles

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