Auto Insurance Policy – Coverage Options & Premium Costs

Some vehicle owners want the best auto insurance coverage and some just want enough to be able to drive legally. Personal and financial circumstances play an important role in motorists’ choice of car insurance policies. Majority of policyholders go beyond the basic liabilities cover and find a middle ground between the coverage level and premium costs.

Quite a few auto insurers offer great packages that provide essential inclusions while the rates still remain competitive. It would not be a problem to find custom plans as well if your requirements are a bit complicated or specific. Whatever you are looking for, it is more than likely that there will be an insurance company selling it. Below basic descriptions of common covers are listed. This would help in choosing the best car insurance policy for your circumstances.

Bodily Injury Liability

Every person will need to make sure that at least there is a basic cover for possible damages he/she may cause to other people. This is the number one requirement of being able to drive legally. Bodily Injury Liability is arranged to pay for the injuries. It includes hospital and rehabilitation costs, loss of wages and other consequential losses including cost of defending against the claims.

The only protection it provides to the policyholder is taking away the financial burden of meeting these claims when they are at fault in an accident. Otherwise, they can be sued for everything they own until all the losses have been recovered.

Property Damage Liability

Second part of a liabilities auto insurance policy is for property damage caused. When a driver crashes onto other people’s automobiles, homes and cause damage to personal property, they are liable to make those damages good. This portion pays for the damages to vehicles, buildings and objects of personal possession. It could be a fence, mailbox, bicycle or an expensive car.

These two parts are normally sold under third party liabilities as one. These types of basic liabilities auto insurance policies do not cover the losses of other drivers included in the policy, anyone who was driving with the permission of the owner or the family members.

Medical Payments

Insured drivers and family members may need to have protection against possible injury costs after an accident since liabilities do not cover policyholders and household members. Medical Payments (MedPay or MedPM) will pay for any sensible costs faced due to a vehicular incident, no matter who was to blame. Normally, these claims must be made within an agreed period after the accident.

It will cover the policyholder, family members, passengers, and others allowed to drive the insured car. Usually the coverage extends for the policyholder and family if they are passengers in someone else’s automobile, or if hit by a vehicle while walking or riding a bike as well.

MedPay will typically pay for hospital, surgical, chiropractic expenses, x-ray, dental, nursing, prosthetic and funeral expenses.

Personal Injury Protection

No-fault automobile insurance states require Personal Injury Protection (PIP) cover within a liabilities auto insurance cover. It pays for the costs of injuries to you, insured family members, and passengers (if not covered by their own PIP). Those no fault states require every party to buy their own protection against possible injuries. This reduces litigation and arguments over who is to blame.

MedPay and PIP is there to pay for the injuries to policyholders, household members and others included in a car insurance plan. However, bodily injury liability is there to provide protection for third parties and does not include the policyholder or the members of the family.

Essentially, motorists will have to follow the requirements of their states. This can vary considerably among the states. Therefore, you need to check what is the legal minimum requirements, before you can choose what else should be added. You can always get quotes for a cheap liability car insurance policy online right here.

No-Fault Car Insurance States

There are currently nine states that require drivers to carry no-fault insurance:

Florida                  Massachusetts                  New York

Hawaii                   Michigan                            North Dakota

Kansas                 Minnesota                          Utah

These states require drivers to insure themselves, family and in some cases passengers against injuries in a crash. Regardless of who is at fault, each party’s insurer pays for the recovery costs of their policyholders. The thinking behind no-fault rules is to cut down litigation expenses. As it covers medical expenses, rehabilitation and wages lost due to an accident, individuals cannot sue the policyholder for pain and suffering unless they meet predetermined conditions.

Collision Cover

The next step is to consider covering the damages to cars owned. Collision coverage is there to pay for the damages to vehicles as a result of crashes. There is no legal requirement to insure your own vehicle. But you would want to make sure that there is an auto insurance policy in place to protect your investment, especially when you own a brand new or expensive enough car. Furthermore, this cover will be required by the lease or car loan providers to protect their assets or loans.

Usually, when policyholders have older automobiles without loan they consider dropping this coverage even they arranged it earlier when it was new. Instead of paying the premiums, they take a chance and accept to pay it out of pocket if something happens. Another way of reducing the costs is to increase the deductible rather than dropping the coverage completely.

Comprehensive Cover

On top of collision you may want to include comprehensive coverage. It will pay for the damages as a result of theft, weather related losses like hail, flood and windstorm or hitting an animal. It will in fact include most losses except the collision. When you have a leased car or a loan you will probably be required to buy this addition as well. Deductible applies to this part too and you can play around the figure to cut down the premium.

Uninsured or Underinsured Motorists Insurance

Studies show that one out of every six driver in the United States of America is uninsured. This may be surprising considering every driver has to buy a liabilities car insurance before they go behind the wheel. Apparently, there are enough people out there that do not think much of rights of others or the laws. Also, few may not be able to afford it even though they like to buy enough protection. Unless you live in a no-fault state an accident involving an uninsured motorist can have disturbing consequences for your personal finances.

If you live in Pennsylvania, Illinois, Maryland and New York this is not optional. Furthermore, quite a few package auto insurance policies will include it automatically. Otherwise, it is a worthwhile addition to have. The costs can be as low as $50. This coverage will pay for you, insured household members, or passengers in the event of an accident (not your fault) with an uninsured or underinsured driver. It extends to hit-and-run cases, while you are on foot, riding a bike, or a passenger in someone else’s vehicle.

There are several more types of coverage to add on to car insurance policies depending on personal preferences:

Recovery Services: Plenty insurers like to sell additional services like roadside recovery which includes retrieving keys left inside the vehicle, limited towing when it is broken down on the road or bringing gas when you run out on the road. Personally, I would buy my roadside recovery from an independent provider and avoid linking it to my automobile insurance policy.

Rental Reimbursement: This extra is there to pay for the car hire costs while the insured vehicle is being repaired after an accident or stolen. Every policy will explain its limitations and circumstances it applies.

Gap Policy: When a car is a total loss after an accident or not recovered after stolen insurers pay for open market value of it. This may not be enough to pay back the loan on it or meet the liabilities of a lease contract. A gap auto insurance plan pays the difference to settle the loan and it will probably be required by loan or lease providers. You have to buy the comprehensive and collision coverage before you can buy gap cover.

Accidents do happen and the choices you make can make you sleep better at night knowing that you bought the best car insurance policy to protect your family, finances and of course the car. At the end of the day, quite a few of them are down to personal choices. Nobody knows what you think or want and how much you can afford better than you.

Remember that you can probably manage to get great coverage from a decent vehicle insurance company at very competitive rates. You can find the best auto insurance policy if you shop around attentively. You have plenty choices in the USA regardless of which state you live in.

Get a few quotes from various insurers and compare them for coverage, reliability and prices. Also, remember to get quotes for varying level of deductibles and covers to see how adding or taking off certain coverage would affect your premium quotes. There is high chance that you will have large savings by shopping around effectively.

Hopefully, we have been helpful and you will remember to come back to this site when you want to find the best vehicle insurance policy to work out the costs and covers. Please check back whenever you look for answers to most vehicle insurance related issues. We have some more articles and a lot more coming.

Share on Pinterest
There are no images.

Leave a Reply