Having the right automobile insurance is vital in the event it is needed. We may not use the insurance for years, but when we do no need it, having the right company and coverage can make all the difference.
1- Understanding the Types of Insurance
Automobile insurance types and levels of coverage can sometimes seem daunting to understand. Each type covers a different circumstance. As outlined, some may be required by the state or by the lender. It is imperative that car owners understand these requirements and their financial liability in each situation. CNN warns that it is important to know the coverage types and to make sure you have enough coverage to protect your financial situation.
Comprehension and collision insurance covers damage to your vehicle. It is for newer vehicles and may be required by your lender. Accidents, natural disasters, theft and fire are among the hazards that may be covered under these policies. Levels of coverage vary and costs depend on the type of vehicle and number of miles that you drive.
Liability insurance provides medical coverage for passengers and others who are involved in an accident that is caused by your vehicle or actions. This type of insurance also covers property damage caused by an accident. This could cover an automobile or other types of real property. “Most states have a low minimum requirement for liability insurance, but it may be in your best interest to review higher coverage levels to reduce your financial exposure,” said McMillian Insurance Agency.
Uninsured/underinsured motorist insurance may also be required by the state and your lender. This coverage comes into play when you are not at fault, but the driver who is at fault driver does not have enough insurance to cover the medical bills and the damage to your vehicle or the driver leaves the scene. In these cases, it will be important to know your states minimums and know that you have enough coverage.
Personal injury protection covers medical bills that may arise regardless of who is at fault in the accident. This type of insurance works in tandem with other types of insurance including health and disability.
2- State Insurance Requirements
Each state has its own basic requirements for automobile insurance. In order to register your vehicle, you will be required to show proof of insurance. Most states require uninsured/underinsured insurance, personal injury protection and both medical and property liability insurance. Your insurance agent will provide you with the specifics for your state, but it is a good idea for you know the information yourself.
3- Lender or Leaseholder Requirements
In addition to state requirements, a vehicle that is financed or leased will need insurance that meets the financing company’s requirements. The types and levels of insurance may vary by company and by vehicle, so it is important to make sure that you are aware of these prior to financing the car. Depending on your circumstances, it may be beneficial to determine this before accepting the finance offer.
4- Choosing the Insurance Company
Once you know what you require, you can have an intelligent conversation with various companies about your insurance needs. Rates can vary greatly depending on your situation and the company you choose. Dealing with a full service agency will allow you to get quotes from various insurance companies. You can also deal with individual companies that will guide you through their process. If you already have homeowners or rental insurance, this is a good place to start as you may receive discounts based on the number of policies you have with the agency.
Buying a new vehicle can be an intimidating task in itself. Add the decisions necessary to obtain insurance and it gets even more complicated. The positive thing to remember is that insurance can generally be adjusted if you make an initial error.