Auto Insurance Cover

Auto Insurance Cover – The Facts

4 January, 2010

Buying auto insurance need not throw you into fits of confusion. By understanding what your needs are and what coverages are available to you, you will be able to choose the right policy.

Liability Cover. Liability coverage pays others for damages resulting from a car accident that you cause. It also pays for a lawyer to defend you if you are sued for damages.

Comprehensive Coverage – Comprehensive cover requires your auto insurance company to pay for damage to your car caused by something other than an auto accident such as fire, theft or vandalism. This sort of coverage is subject to a deductible. If you decide upon a $100 deductible, then you pay the first $100 and the company pays the rest up to the policy limit. Sometime this cover is combined with collision protection that covers you for damages sustained in a car accident.

Collision Coverage. Collision coverage is intended to cover losses to your car when you are involved in a collision with another car or with a stationery object.

Uninsured/Underinsured Cover – Uninsured driver coverage covers your medical expenses and those of your passengers (and in some states property damage as well), in an accident caused by a hit-and-run driver, a driver with inadequate insurance, or a driver with no insurance at all.

GAP Coverage. We all know that there is a sharp decline in the value of a car immediately after purchase. This means that any loan you took out to finance the purchase of the vehicle could be many thousands of dollars greater than the amount your auto insurance company would pay out if your car was stolen or became a total loss following an accident. Gap cover or loan/lease cover as it is also known is intended to bridge that gap in valuation and the amount you owe on the loan.

Personal Injury Protection (No Fault). This form of cover is only required in “no-fault” states but is optional in others and covers injuries to yourself and others in your vehicle regardless of fault.

Pay-Per-Mile – A fairly new type of coverage is Pay-Per-Mile. It is so new that it is currently available only in a few states. Basically you pay auto insurance based on the usage of your car. The less you drive, the less you pay. The downside is that in order to benefit, you have to allow your auto insurance company to put some form of tracking device in your car.

Auto insurance policies are usually a combination of coverages. For example comprehensive and collision cover are quite often combined under the title “full coverage”. Whatever the terminology, it is always best to seek further advice before purchasing your policy.

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