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Car Insurance Basics

Learning the Basics
The typical car insurance policy contains six coverages that make up a car insurance policy. Each of the policies cost different amounts.

1. Bodily Injury Liability Coverage
Bodily injury liability coverage only will cover any injuries to you, the designated driver or the policyholder cause to another party in an auto accident. The policy will also cover anyone that is listed on the policy or anyone in your family while driving other people's cars; granted that you have their consent.

You want to make sure you have enough car liability insurance in case you are ever in any serious accidents. Sometimes the other party may want to sue you for a huge chunk of money. If you don't have enough insurance, your personal assets could be put up to cover the difference. Definitely make sure you have more than the required state minimum to protect your valuable personal assets.

2. Personal Injury Protection
PIP coverage will pay for any treatment due to injuries to the driver and any passengers while in the policy holder's car. The coverage will help cover medical payments, job wages lost and the amount to replace services that is normally performed by a person injuried in a major car accident. It may also pay for funeral expenses in some policy plans.

3. Property Damage Liability
The damage liability coverage will for any damage to you (or someone driving your car with your permission) caused to someone else's property. Typically, this is only damage inflicted to someone else’s car, but it also includes outdoor property such as telephone poles, buildings, fences or any other objects your vehicle hits.

4. Collision Damage Coverage
This damage coverage pays for harm done to your car that was a result of a collision with another car, object or because of the car flipping over. It will also cover damage cause by street potholes. Collision coverage is usually packaged with a deductible of $350 to $1,000. The higher the deductible, the lower the coverage premium will cost. Even if you are at fault in the accident, your collision coverage policy will reimburse you for any cost of fixing up your car, minus the deductible of the plan. If you are not at fault, your auto insurance company will typically go after the other insurance company of the party at fault. If they are successful, you usually get reimbursed for the deductible.

5. Comprehensive Coverage
Comprehensive coverage will reimburse you for any property loss due to theft or damage caused by something other than a collision with another car or actual object, such as falling objects, earthquake, explosion, fire, windstorm, hail, flood, vandalism, riot, or contact with animals such as birds or cows.

This insurance is typically sold with a $200 to $500 deductible, although you may want to choose a higher deductible as an way of lowering the insurance premium. This usually is not needed, but in the rare cases of an unexpected earthquake or fire, can definitely keep you on your feet.

Comprehensive auto insurance will also reimburse you if your windshield is cracked or shattered. Some companies offer glass coverage with or without a deductible. Windshields can range as low as $99 to over $1000 in the higher end cars. Most of the time, the windshields are around $200-$500 dollars.

States do not require that you purchase collision or comprehensive coverage, but if you have a car loan, your lender may ask that you carry the comprehensive auto coverage until your loan is paid off.

6. Uninsured and Underinsured Motorist Coverage
This coverage is becoming more important these days because of the number of uninsured drivers, and will cover you, a member of your family, or a designated driver if one of you is hit by an uninsured or hit-and-run driver.

The coverage comes into effect when an at-fault driver has insufficient car insurance to pay for your total loss. This coverage will also help cover you if you are hit as a pedestrian.

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