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Auto Insurance Coverage in Detail

If you have a car, you need car insurance coverage. This is the law in 47 states and many states such as Virginia require that you pay the state a fine if you do not have liability coverage. As good a reason for paying insurance as the chance that you will lose a lot of money if you become involved in an auto accident without insurance coverage.

Types of Auto Insurance  Coverage

Taking an auto insurance policy is not as simple as going to the insurer and asking them to cover your vehicle. There are different types of coverage included which will determine the instances when you will get paid and the premium you will have to pay. More the amount of coverage, more you will pay.

1) Liability Or Fault Coverage is required by most states and is determined based on a torte system or a no fault system. The torte system determines the driver who was at fault (drunken driving, speeding etc) and holds him financially responsible. The money required for repairing property (car or building) as well as medical and other costs are paid him. Under the no fault system both drivers are required to pay. The fault coverage includes bodily injury liability (if someone is injured due to your or your car’s driver’s error) and property-damage liability (where a property is damaged due to your carelessness). Depending on the amount of coverage, the company will bear the expenses. Anything additional needs to be paid by you.

2) Comprehensive Coverage covers your car if it gets damaged in an event which doesn’t involve an auto accident; such as fire, theft, vandalism etc. In this case a deductible or excess is set which means that the amount up to the deductible limit is paid by you and the rest by your insurer. If you have a $100 deductible, the first $100 will be paid by you and anything additional by the company.

3) Collision covers your vehicle repairs when you are in an auto accident; irrespective of who is responsible. This comes handy if the person responsible is uninsured. Deductibles are often included in this type as well.

4) Personal Injury Protection will cover for your expenses when you (and the others covered in the policy) are hurt by a vehicle, whether you are in a vehicle or just happened to be standing on the side of the road. The amount your insurer will pay depends on the amount of coverage.

5) Uninsured, Under Insured Motorist Bodily Injury will pay for your medical expenses if you get hurt in a motor vehicle accident with an uninsured or under insured vehicle. You need not be in an auto to be eligible and the payment will depend on the coverage amount.

6) Uninsured, Under Insured Property Damage will pay for repairing your property or your car if either gets damaged in an auto accident where the automobile is not insured or under insured.

There are also other types of policies such as emergency road service (which pays when your car gets towed), car rental expense (which pays for renting), death dismemberment, and loss of sight (when people named in your policy either dies or get the mentioned injuries), GAP coverage (which pays for the difference between the current market value of your vehicle and the amount you owe the loan lender, in cases where your auto is a total loss), and custom equipment coverage (which includes trailer/ camper body, snow mobile, joint ownership etc).

Sometimes you can take out specialty insurance policies such as teen insurance (for drivers who are teens) and exotic or classic car policies (where you own a classic or rare and expensive automobile like a BMW or a Lamborghini).

Auto Insurance Policy Costs

There are many factors which affect the cost of your policy, other than the amount and types of coverage included.

1) Age. The driver’s age affects the premium since people in a certain age group (under 25 and over 65) are more likely to cause accidents. Hence people below 25 and above 65 will have to pay more premium than those who fall between 25 and 65. If you have an additional driver in those age groups, your premium will go up. You can avoid this by taking a specialty policy such as teen policy separately on a more safe less speed car.

2) Gender. Sex also determines the premium since young men are more likely to cause accidents. Hence many states allow insurance agents to differentiate based on gender.

3) Marital Status. If you are married, you will have to pay lesser premium since married couples are found to cause fewer accidents than single folks.

4) Vehicle Type. The type of your automobile such as sports car or otherwise, or more expensive car or otherwise will affect your insurance payment.

5) Location. If you stay in a location where accidents are common, your insurance will cost you more.

6) Driving. The number of miles you drive will also affect your insurance. If you drive more, you will pay more. Many insurers, especially specialty insurance agents, limit the number of miles you can drive. There is also the pay as you drive insurance systems which make you pay your premium based on the gallons of fuel you use or miles you travel.

7) Driving Record. Of course your driving affects your payments. If you have an exemplary driving record you will have to pay very less. These cheap policies come in the preferred market. If you have a reasonably good record you will have to pay more. This is the standard market. If you have a bad record you will have to pay very high and the agents who offer policies for such drivers come under the non-standard market.

8) Credit History. also determines your premium amount. Better credit score will give you lower premium.

You could get insurance quotes from different agents for free. You can compare these and then determine which policy to go for. If your driving is good, your car is secure, and your deductible is more your premium will be less.

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