Your lender or state requirements will sometimes determine the type of car insurance coverage you purchase. It is important to know the type of insurance you need to purchase to meet lender or state requirements, but at times the terms can be downright confusing.
To give you a leg up, check out the five most misunderstood car insurance policy terms explained below.
Your dictionary will define the term comprehensive as inclusive of a wide range of items. In the world of car insurance, comprehensive describes coverage that is limited to your vehicle.
To make things simple, your agent might explain comprehensive insurance as one thats other than collision. This simply means that youll be covered for all damages that occur, as long as there were no collisions.
The cover will not pay for damages to another car or property; neither will it cover the costs for personal injury. It will pay for repairs caused by fire, flood or hail and will replace your vehicle if its stolen.
Comprehensive coverage is more of a lender than a state requirement.
Bodily Injury Liability Insurance
Bodily injury liability insurance is a requirement in most states because it provides protection for an innocent victim if youre the cause of an accident.
The insurance will take effect if youre the one at fault in an accident and will cover the costs injuries to someone you hurt. It will not cover your own injuries or injuries of other passengers in your car at the time of the accident. Youll have to subscribe to a separate medical payments insurance to cover yourself in the event of an accident. Your passengers will have to use their own health insurance coverage to take care of their injuries.
Property Damage Liability Insurance
That is another type of coverage that is mandated by most states since it pays for damages your car does to another vehicle or property.
Hit another car or property, such as a storefront, closed garage door, or light pole, and the insurance will pay for the damage. The insurance is limited to damages caused to another persons property. Youll need collision coverage to cover your own car.
Personal Injury Protection (PIP)
In some states, where no-fault insurance laws are in effect, drivers are required to submit their medical claims to their own insurance companies. Drivers in a no-fault state must purchase PIP coverage.
In most cases, the coverage will take care of medical expenses, as well as lost wages, funeral costs, and any help youll need with household tasks during your recovery from serious injury.
Youll have to check whats covered in PIP coverage by your provider since it varies from state to state and from one provider to another.
Your deductible is the amount you agree to pay out of pocket for each claim before your insurance picks up the tab. With auto insurance, deductibles can vary from $0 to $1,500 and are available in increments of $100 to $250.
Pay a higher deductible if you want to lower your premium. Your agent will be able to recommend an appropriate amount based on your unique circumstances. For instance, a high deductible might be good for an older car since youre less likely to repair dents and scrapes.
Your financial circumstances will also dictate your deductible since you must factor in how much you can afford to pay in the event of a claim.
These are just a few of the misunderstood car insurance terms. Always ask your agent to clarify any terms you dont understand.
Sam Jones is the author of this article. He has been researching cheap car insurance for new drivers by going to uSwitch.com price comparison site and using the online price comparison facility to obtain multiple quotes with just one form fill
This article is copyright free.