There are several ways of looking at insuring your vehicle. You should find answers to what should my car insurance include before worrying about buying one. It is important to know all your options first and choose whichever one you like rather than start searching for the cheapest. The premium difference between a basic policy and a good one may be negligible, especially if you believe additional security is worth the money. It is safer to include something if you cannot decide to have it or leave it.
This topic is extensively probed in another post on this website but it makes sense to touch it here once more. About 72% of policies sold are full coverage that makes it the most popular. This suggests that most people buy it for peace of mind and not because they are legally required. So, it is best to break it down based on they type.
As we discussed in detail in another post on this site, liability is for the damages you may cause to other people and their properties. It doesn’t pay any of your or your family’s damages and injuries.
Yet, you need to buy enough to make sure that all the liabilities arising from an accident you caused is paid for. Otherwise, you will be putting everything you own on the line to pay for such damages and injuries. That is why it is fair to say that the richer you are the more you should buy.
Does Insurance Cover Auto Repairs?
No matter what type of a policy you have it should pay for repairs to third party vehicles up to your limits should you be the one who caused the accident. Remember that third party vehicles are the ones belong to others. Does it compensate your own losses? This totally depends on the type you have. Liability only don’t provide any protection for the policyholder other than against third party claims. You need to have Collision and Comprehensive to claim for repairs to your own automobile and they are explained below.
What Does Full Coverage Vehicle Insurance Include?
As liability only doesn’t pay for your own losses you need to consider how to handle such risks that come with driving. Accidents do happen and statistically, you are likely to have 3 – 4 accidents in your lifetime. So, you cannot really ignore it and hope for the best.
A typical full policy would be a good solution for most people as it includes Liability, Collision and Comprehensive at a fairly reasonable premium. These three take care of the largest damages and losses you may suffer or cause others to suffer and therefore can prevent a potential financial ruin.
You may see several others included in a decent package depending on the provider and the state requirements. No fault states require minimum Personal Injury Protection (PIP) as part of their minimum limits. Some states require Uninsured Motorist to be included with every policy sold automatically. And some like to include Rental Reimbursement as well to make it more attractive.
So, it at least provide Liability, Collision and Comprehensive and may have more. It is best that we look at the essential components of a typical policy and explain each of them.
Liability Coverage: A typical policy would include this. Providers tend to offer higher than minimum in their plans. Still you should check to make sure that you are happy with the limits included in. You can always ask to increase the limits or look for packages with larger amounts.
Collision and Comprehensive Coverage: The next thing that comes to mind is damages to or total loss of your vehicle. It can be stolen, get involved in an accident with an uninsured motorist, perish in a fire or totaled due to natural disasters. Adding collision and comprehensive to your policy makes sure that your vehicle is insured if anything happens to it.
– Collision Cover: As the name suggests, it pays for damages due to traffic accidents. Your vehicle would either be repaired or totaled following an accident. If it is repairable, the company would pay for the costs of repairs. Otherwise, it would send you a check for its open market value.
– Comprehensive Cover: It pays for other damages to your car like flood, hurricane, falling objects, theft, fire, vandalism, civil disturbance and so on. So, this is for all the other damages to your automobile including accidental damages, except collision.
You are not legally required to have a provision for your own losses but it would be a sensible thing to do, if you can afford it and if your automobile is worth something. Most people cannot afford to replace their cars on their own if something happens to it and therefore they should have the protection. On the other hand, you may be alright not to bother if you own a clunker that is worth less than $4,000.
Uninsured Motorist Coverage: About 14% of US drivers are driving without insurance. This is a serious number and it can be even worse in your state as some states have as much as 24% uninsured drivers. If they cause an accident it is fair to assume that they wouldn’t have the means to pay for the losses they caused.
This may be automatically included in because a few states require it to be included in every policy sold. If not, it is always a good idea to add, just in case an uninsured driver cause damages to your vehicle and injuries to you. It is there to help even when you are a pedestrian.
Personal Injury Protection (PIP): The next you should consider is PIP or Medical Expenses Coverage, especially if you don’t have good health insurance. This is the part that pays for injuries you and your family may suffer regardless of who is at fault. If your health insurance includes such injuries and costs you may not need it. Personal injury protection pays for consequential losses like loss of wages as well while medical expenses is just for medical costs. PIP is required as part of minimum in no fault states but its limits would be low.
Once you have all the above you can consider yourself fully insured.
Other Additional Covers: However, you can add more if you want. For example, you can add GAP, rental reimbursement, accident forgiveness, towing and emergency assistance. Some full coverage policies may have extras included to make them more attractive but it can make them more expensive in the same time. You need to look at the cost while considering these additions and decide if they are worth the money since they are not likely to cause you financial ruin.
Cost of Automobile Insurance
It is difficult to conclude this post without mentioning the costs because it is one of the most influential factors in decision-making. Perhaps, you should start with checking average premium expenditure and average cost of full coverage in your state. This will give you some idea as to how much more you will need to pay for a decent plan, in comparison to an average.
Premium prices can be as individual as DNA and therefore difficult to guess on a personal level. Good thing you can always get a few cheap quotes online for both types and compare the costs. Just remember to get a few quotes for both types in order to increase your chances of finding the best prices. A company who has offered the best rate for the basic may not offer the best rate when you want more. That is why you should always get alternative quotes.
Also, many people get only one quote and take it instead of comparing. If you are one of those policyholders you may end up with a bare minimum that is much more expensive than a decent one.