Understanding Automobile Insurance Rules and Coverages

Essentially there are three basic components of an auto insurance policy.   Understanding automobile insurance coverages and rules is critical to protecting your family and assets.  You must become familiar with the three basic parts of an auto insurance policy and understand what protection each of these coverages provides.  

Another reason to learn about these coverages is that it will give you the ability to shop for and get the biggest savings on your auto insurance quote.    

1) Personal Coverage (Your Family)

This is an important coverage that protects yourself and family in the case of an accident.  Let's say that for some unfortunate reason you or a loved one is involved in an accident and they are injured or killed in an auto accident.  The concern here is where do you get the money if the person who hit you did not have auto insurance or not enough auto insurance?  Of course, medical bills can be covered if you have health insurance.  Unfortunately, health insurance doesn’t cover loss of life, pain & suffering or permanent disability.

If you are lucky enough to have a life insurance policy through your employer or your own individual life policy, you should be able to provide for your family in the future.  But is the benefit amount sufficient to cover your family if your loved one is killed?  Once again, the question becomes whether the life insurance benefit will pay for the misery, the pain & suffering, and perhaps the fact that you or a loved one can’t walk or use their arms again?

You might have a disability insurance policy through your work if you’re lucky or had good financial advice. But disability insurance doesn’t pay for loss of life, pain and suffering, permanent loss of your legs, arm or hand.
 
The only coverage that pays for these losses is a part of an auto insurance policy known as "Un/Under-insured motorist coverage". You can only buy as much coverage here as you have in Liability coverage. An online insurance agent can help you with understanding automobile insurance coverages that are right for your particular situation. 

2) Your Personal Automobile

Comprehensive and Collision Coverages are the second part of an auto insurance policy and are sometimes referred to as “Full coverage.”  You really need to understand how these coverages work to maximize your car insurance savings.  Simplistically, the difference is as follows:

• If you run into a tree you are covered by Collision coverage.
• If the tree falls on your car, then you are covered by Comprehensive coverage.

Comprehensive coverage also covers broken windshields, fire, theft and vandalism. The higher you set the deductible (risk you take), the lower your premium will be.  You can then use the savings on the Comp and Collision coverage to purchase higher limits in the coverages that protect your assets and your family, such as the liability coverages.

The biggest factor in determining the proper auto insurance coverage for you is probably the money available in your household budget. An excellent place to start in determining the proper auto insurance coverage for your family is to discuss these coverages with an online auto insurance agent.  Almost every online service providing auto insurance quotes has a help desk to explain the various types of coverages.

NOTE: Some online auto insurance companies focus on one thing only: Price.  Of course, getting really cheap auto insurance is the goal of every driver.  But you need to be able to tell the agent what types of coverage you have now and they will determine if they can provide you the same coverage for less.

Make sure that the quotes are an apples-to-apples comparison.  If they do not provide the exact same coverage you already have, then it will be difficult to determine if you are really saving money on this quote.  You can always adjust coverages later to maximize protection and savings.

This is why YOU need to become knowledgeable about the insurance coverages.  If you have questions about these coverages, don't hesitate to seek the advice of a professional who will help you determine the proper amount of coverage and how best to get it.

3) Other Party Coverages

Auto Insurance Bodily Injury (BI) Liability and Property Damage (PD) coverage is legally required in most states in today's insurance climate.  Most people understand that they need BI & PD, but the real question becomes  how much coverage they need.

Ask yourself this simple question: What if your car was involved in an auto accident tonight where someone else was injured or killed?  The point here is that everything you own is at risk if the other party engages you in a lawsuit!  Settlements of a million dollars are common these days, so where would you get this kind of money?

Don't risk everything you own - understanding automobile insurance and the various coverages is  a must if you want to protect your family and your assets.  So, read the articles on our website to become an educated consumer and get a really cheap auto insurance quote today online!