Insurance for your car is no longer a
luxury; it is an absolute necessity. The majority of states require
owners to carry liability insurance. Whether your state requires car
insurance or not, you should have enough liability insurance to protect
you from the consequences (law suits, bills to pay, and the like) of any
damage, injuries, or destruction that might result from an accident.
Other types of coverage are also available; these provisions are usually
optional and depend on what you want and the amount you can afford to
pay.
Insurance companies write many different
kinds of car insurance and costs vary from company to company, so it
pays to shop around. Though most states have a regulatory agency that
oversees and ap-proves car insurance rates, rates still vary in a given
state. Other criteria that enter into the rate structure are the city,
county, or area where you live, as well as the age(s) of the driver(s).
If you do not yet own a car but plan to
buy one, call an insurance agent to get the rates his company offers.
Choose the options and amounts you want and then call several other
companies selling car insurance to compare prices. Buying insurance
cannot be postponed; you need insurance immediately when you sign the
papers and drive the car.
If you already own a car and are
planning to trade it in, the new car usually will be automatically
covered by your insurance policy for several clays, to give you plenty
of time to notify your insurance agent of the change in vehicles. Call
your insurance representative to verify this fact before you trade cars.
Many new- and used-car dealers offer a
“package” plan of car in-surance (as well as car financing) at the time
of purchase. All you have to do is make one inclusive payment each
month. What a nice dealer he is to arrange car insurance and financing
for you, saving you a lot of trouble and bother! Hold it!
You may be
paying a dear price for the time and effort saved. In some states it is
not legal lor an auto dealer to give you complete coverage, and you will
have to buy li-ability insurance somewhere else. Shop and compare
insurance costs; you will probably find out that an insurance company’s
rates are cheaper.
INSURANCE PROVISIONS
Auto insurance has several different provisions or choices. Buy the policy that gives you the coverage you want.
- Liability
Liability coverage is usually written in
three numbers: for example 15/30/10. The first number indicates that
the company is liable up to $15,000 per accident for any bodily injury
to one person who is not in your car.
The second number states the
company liability for bodily injury to others who are not in your car,
which in this case is $30,000 maximum for each accident. The last number
indicates the company’s liability for property damage, in this case up
to $10,000 per accident.
Some states require a minimum liability
coverage of 15/30/10. The company will pay no more than the liability
amount in your policy, and you will have to pay the additional
difference if your car causes personal injury or property damage and the
court awards more than the company is liable for.
For this reason,
many automobile owners decide to buy more than the minimum required by
law, such as 100/300/50 ($100,000/$300,0O0/$5O,0OO). Increasing your
liability insurance to higher limits is relatively inexpensive,
considering the possible conse¬quences. Carry enough liability insurance
to safeguard your future earnings and to protect your accumulation of
property and valuables
- PIP
This word stands for “personal injury
protection” and refers to medical expenses resulting from bodily injury
plus loss of income. The coverage includes you and any member of your
family residing in your household, whether as a passenger in a car or as
a pedestrian
- Uninsured Motorist
Even though your state requires all car
owners to carry insurance, you could be hit by an uninsured motorist
from your state or another state, or by a hit-and-run driver. You can
have a provision in your policy that covers injuries to the driver, any
passengers riding in the car, and any household family member, either as
a passenger in any car or as a pedestrian. However, the uninsured
motorist provision does not cover property damage.
- Comprehensive Physical Damage
This part of your policy applies to
damage to your car, with certain exclusions. Glass breakage, storm and
wind damage, fire, theft, vandalism. Hood, riot, and collision with an
animal are examples of hazards that are covered; whereas a collision
with another car, normal wear and tear, or freezing are not.
- Collision
Collision insurance pays for damages to
your car caused by a collision with another vehicle or an object. The
damages to your car are also covered if your car overturns, for example
by skidding, even though it did not collide with an object. Most
collision coverage is pur-chased on a $50-, $100-, or $200-deductible
basis, which means you have to pay the first $50, $100, or $200 of the
cost of repair.
Obviously, $100 deductible collision coverage will cost
you less than $50-deductible collision coverage. Most owners do not have
full collision coverage because the cost is prohibitive. Collision
insurance covers only damage to your car, not injuries or damage to the
property of others.
- Other Provisions
A variety of other provisions are
available, including emergency road service, personal effects coverage
(goods stolen from the car), and death indemnity coverage
NO-FAULT INSURANCE
Approximately one-third of the states
have adopted some form of no-fault insurance. Increasing costs of
automobile insurance have contributed to the adoption of no-fault
insurance in an effort to keep rates down. Because studies show that
legal costs in accidents are a major expense to insurance companies,
their reduction or elimination saves the companies money, which results
in lower costs to the insurance buyer.
Basically, no-fault insurance means that
when the damage done by the accident does not exceed certain limits set
by a state, persons involved in the accident cannot use legal means to
determine who was at fault. No-fault insurance is constantly being
revised and modified from state to state; your insurance agent can
explain the current regulations in your state.
BUYING AUTOMOBILE INSURANCE
Remember to shop for insurance the way
you shop for a tangible object, such as a house or a car; the effort
will save you money. Friends can often tell you their experiences with
companies regarding fairness and promptness in settling claims; your
chamber of commerce or Better Business
Bureau will have a list of
reputable companies. If you travel, find out which companies have
representatives or a provision for handling claims in the states where
you expect to be.
