Is your current car insurance the right policy for you? Is your coverage actually enough? Most drivers know that their coverage might have a combination of liability, comprehensive, and/or collision, but not many of them give their insurance coverage a lot of thought until they’ve already been in an accident.
Car insurance shopping is something that often gets blown off or not taken seriously enough. That happens largely because many teenage drivers just start off on their parents’ policy and then just get the cheapest insurance they can when it comes time to pay for their own.
This article is going to cover the various forms of insurance coverage, along with helpful hints you can use to get the most bang for your buck.
Two of the primary purposes behind car insurance are protecting your physical health and your financial assets. Of course, the initial step in this whole process is getting appropriate coverage. Most people will use the web for comparing car insurance.
The following are the standard forms of coverage that most drivers learn:
This coverage is mandatory in almost all states, but not every single one. It’s coverage which pays out for third-party claims regarding death or personal injury, on top of property damage resulting from a vehicular accident or incident.
This is the coverage that would pay for car repairs following an accident. It’s mandatory if your car is financed through a loan, since the car isn’t technically yours yet. It still is legally owned by the bank, which would rather not get stuck with a car that is wrecked.
This is the coverage that would pay out claims resulting from fire damage, water damage, vandalism, theft, or the like. If you have paid off the car loan, or just paid cash up front in full, then you might not need comprehensive or collision, especially if your car’s listed retail value is under five grand.
On top of the primary kinds of coverage already listed, there are additional options:
You can keep your insurance bill a few bucks lower if you waive your rights to sue someone following an accident. On the other hand, giving up any of your rights isn’t usually a sound money move.
Personal Injury Protection/Medical Payments
This coverage would pay for medical bills that a policyholder and his or her passengers get hit with following an accident. If your health insurance is good enough, this might not prove to be necessary.
Underinsured/Uninsured Motorist Coverage
Coverage like this handles property damage and medical bills if you get in an accident with a motorist whose insurance is either insufficient or nonexistent.
This coverage will pay for towing should your vehicle be inoperable following an accident. This coverage might actually be unnecessary if your car has manufacturer-provided roadside assistance or you’re a member of some kind of automobile services, such as AAA.
A number of companies don’t cover broken glass with their comprehensive or collision policies. Having said that, this particular coverage is rarely worth what it costs in the long run.
You can get coverage that will cover a rental car while your car is being repaired, but most markets have rental cars so cheap that this coverage is possibly not worth paying for.
If you buy a forty thousand dollar sports car and then total it before you get home the first time, your insurance company payout isn’t going to be what you paid for it on the lot. You’ll get stuck with no car but a huge bill, and the same thing can wind up happening if your new ride gets stolen.
Gap insurance is what will pay the difference between what you still owe on your vehicle and the listed blue book value. Gap insurance is a good idea if you buy a vehicle with a low down payment, no down payment, or if you lease.