Basics of Car Insurance Coverage
Standard information is included in most car insurance policies. While the specifics of the information can vary by state, the basic coverage points serve as a starting point for developing the exact policy you need. Not having minimal coverage, as defined by state law, is illegal. But not having sufficient coverage, or not understanding the coverage you have, can be financially disastrous if you are involved in or cause a car accident.
Type of Coverage
The primary purpose of auto insurance is to protect you from financial liability in case of a car accident. Liability coverage comes into play if you are responsible for injuring another driver or his passengers. It also protects you from the costs associated with the damage to the other car. This type of insurance is legally required in all states. It is not necessary under the law to have coverage beyond liability. However, it should be noted that minimum coverage will not, in any state, cover the costs associated with a serious auto accident.
Personal injury protection covers you and your passengers. As long as you do not routinely carry passengers, you may not need this coverage if you have strong medical insurance. Supplemental disability insurance can also come in handy. State law dictates whether or not you have to have personal injury insurance.
Your car is protected under collision and comprehension coverage. You may be required to include these two coverage types in your policy if you have a car loan. Perhaps the most important coverage is for the uninsured motorist. With this additional coverage you are protected if you are injured or your car is damaged by a driver who is not insured. It can be particularly useful if you are the victim of a hit-and-run accident in which the other driver does not stop after hitting you.
Amount of Coverage
All insurance policies have a limit on the dollar amount of claims covered. There is a maximum amount that is established to cover the medical expenses for all people injured in a car accident. A second amount places a limit on the per person cost. And a third amount indicates the amount of property damage that will be paid for per accident. Any expenses beyond these amounts may be your personal responsibility if you do not have sufficient coverage. The rates you are willing to pay determine the amount of coverage you have to protect you and your family from lawsuits.
An important part of developing your insurance policy is making sure you get every discount you are eligible to receive. Be sure to review this aspect of car insurance coverage with your agent when you first get your policy and at each renewal since you may be eligible for new discounts at that time. Because discounts vary by state and by provider, shop around to learn about all of the available discounts before choosing one.