All About Auto Insurance
Most states require that all motorists have automobile insurance. Fines for vehicle owners, lessees and drivers who do not carry valid automobile insurance can range from a simple ticket to hundreds of dollars. In most states, If you are found driving without valid automobile insurance, you can have your driver's licence suspended and your vehicle impounded.
If you are convicted of driving without valid automobile insurance, your insurance company may consider you a "high-risk" driver and charge you higher premiums or refuse to sell you insurance altogether. More importantly, if you are found to be at fault for an accident causing injury or death to another person, you may be held personally responsible for his/her medical costs and other losses.
Understanding the Coverage: Auto insurance policies come in all shapes and sizes. You can customized a product to match your needs and taste. Here are some of the basics type of coverage options available. You should have at least working knowledge of these terms to be able to benefit from the coverage.
Collision coverage. Name says it all. If you own an automobile, you would like to get it repaired after an accident without paying a fortune from your pocket. Collision coverage portion of your policy covers repairs to your car after an accident. It doesn't matter whether it was your fault or not. Also, if you are in an accident with an uninsured driver, your insurance company will pay for the repair. If the car is completely destroyed, this insurance will pay off. If the car was financed, you will need the proceeds to pay off the loan. Both collision and comprehensive insurance is generally written to cover the car's fair market value. However, their payout may be significantly less than the actual cost of the vehicle if you just bought it brand new. You must buy extra coverage to get purchased price pay-off in case of a new vehicle. If your car is old and doesn't have much monetary value, you may want to drop this portion of the coverage. In summary, a collision coverage pays for the following:
 Accidental loss or damage to your vehicle caused by collision or upset, regardless of who is at fault.
Pays for certain accidental damages when a collision does not involve another vehicle.
Protects you against damage done by another driver in a hit-and-run accident.
Offers a waiver of the first $100 of your deductible if the vehicles in the collision are insured by the same company and policy type within American Family, provided the other vehicle is not owned by, or in charge of you or another member of your household.
Comprehensive coverage. Comprehensive coverage covers what is left out of a collision coverage clause. This portion of your insurance covers damage to your car as a result of random acts like fire, theft, floods, hail damage, vandalism and even damages caused by a stone flying up on the road and cracking your windshield. The amount of comprehensive coverage you need is determined by the value of your car. Comprehensive coverage claims will not increase your premium as much as collision claims. You should always keep comprehensive coverage if you have an auto insurance policy. Premium cost is fairly low for comprehensive coverage and it provides a greater peace of mind. Some policies also provides up to $20 per day ($600 total) for transportation expenses if your vehicle is stolen.
Auto liability coverage. This type of coverage is absolutely essential. If you cause an accident with your car and injure someone or damage their property, auto liability insurance will the pay the injured person's medical and repair expenses. This portion of your policy's cost is usually the greatest. Also, remember this porting is required by law in most states but minimum required is sometimes too low. For example, most states require that you carry at least $15,000 in auto liability coverage but it makes more sense to carry a reasonable amount such as $100,000. The main reason is to protect your personal asset if damage caused by your action is higher than the coverage you carry. If you don't have coverage al all or don't carry enough coverage, your assets such as a home or investments, might be at risk and you might lose then in a lawsuit over an auto accident. The more assets you have, the greater the coverage you need. Discuss the coverage and costs with an insurance agent. This coverage will also cover your own expenses if you're hit by a driver who is under insured or uninsured. A liability coverage protects:
household family members while driving the vehicle authorized in the policy.
others driving your vehicle with your permission.
you when you use most types of trailers with your vehicle.
Reasonable and necessary costs from the following covered losses and expenses are included: bodily injury,
damage to other vehicles,
other property damage
first aid expenses, court costs
One of the important thing to remember is that auto insurance policies are very specific on what they cover. For example, there are separate products to insure motorcycles, snowmobiles, boats and motorhomes. Also, you are eligible to receive discount if you purchase multiple policies from the same insurance company.
Buying auto insurance is very different when you compared to the insurance market from 10 years ago. Now a days, almost anyone can start selling auto insurance by purchasing insurance products in wholesale and then re branding them. You might be offered a very low premium but a lower premium should never be the only yardstick to measure your insurance company. Remember, you're buying insurance to protect your assets in the time of need and how you're going to be treated in those circumstances is the key in selecting an insurance company. Insurance business is built on the concept of paying less in claims and collecting more in premium. Big companies insured millions of people so that have the cash reserve to deal with increased claim volume. However, things are very different for smaller players. Most of the time their focus is to delay the payment or deny it altogether to increase their profit so be very careful when looking for a new insurance company.
Here are some of the important things to keep in mind when shopping for a new auto insurance policy. |
Auto Insurance Resources
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Customer Service: Whether you plan to file a claim or not, customer service should be one of you primacy focus when picking an insurance company. If possible test drive their customer service by making a call. If you end up dealing with recorded messages or automated system for more than 10-15 minutes, it might be a good idea to look for another insurance company. Remember, when you're in an accident or dealing with a claim filing situation, you're already very frustrated and stressed. Last thing anyone needs in this situation is an insurance company that would keep you on hold for 20 minutes. Also take a note of their business hours. Auto accident don't just happen during normal business hours, they can happen anytime and you want to make sure that you can talk to a live person when you need them most. For most part, insurance companies with local agents have better customer care than the one with a national toll free number. Remember, if you have a local agent, chances are that you could reach him/her anytime you need to call. Also, having a person available locally can ease out the stress of dealing with the stressful situation after an auto accident.
Financial Strength and History:You should make sure that the insurance company you're selecting has a solid and stable financial base. What is the point of paying premium for years if your insurance company can't pay your claim when you need it? Remember, there is a financial rating system in place for insurance and other financial companies. For example, Standard & Poor as well as Moody have their own rating systems. Choose a company that has been rated with excellent ratings e future. Most insurance companies with superior financial strength usually have a good claim paying history. Another reason to stay with the big insurance companies is that you can purchase multiple insurance policies from the same insurer and thus get the benefit of multiple policies discount. If your insurance company is too small, chances are that it doesn't offer variety of financial and insurance products so you'll have to find another insurer for your other insurance needs anyway. But if you pick a well established insurance company, you can maximize your insurance dollars and coverage. |
