In the world today where almost everyone uses cars as personal transportation, the car itself became a prominent property for the owner. Inevitably, every car owner needs a car insurance to protect his precious cars. It is very important for us to understand what our insurance covers, to choose which coverage suits us best.
Basically, there are three kinds of auto insurance coverage.
First is the Collision Coverage. Auto insurance collision coverage comes into effect if your car is damaged by an accident, whether you are at fault in the accident or not. In this case, 'accident' covers anything from collision (crash) with another car to single car accidents (ie roll-overs) and even damage by potholes. Collision auto insurance, although popular, is relatively high costs coverage. If you have a new car, this coverage is likely a good investment. But if you have a vehicle which you are driving into the ground, it is better for you to take another coverage.
One thing I would like to suggest is that you can reduce the cost of collision auto insurance coverage by taking a higher deductible. However, this will exposes you to higher costs in the case of an accident. You have to weigh the short term benefit and your driving record against the cost of an accident.
Keep in mind that if an accident is not your fault, every auto insurance company will attempt to recover costs from the 'at fault' driver's auto insurance. If they recover their full costs they will refund you the deductible amount. Therefore, be careful when you read your car insurance policy.
Second one is Liability Coverage, one of the essential elements of any auto insurance policy, particularly if you live in a state that does not include a no-fault clause for collisions. This coverage offer you and any other party involved significant sums to cover what may be exorbitant medical costs.
Generally these figures are written in three parts separated by slashes – the first number represents the maximum your auto insurance will pay any individual, the second presents a cap for all individuals, and the third covers damage to another car or private property in the course of that collision. Get the right auto insurance policy in place and your carrier will go to bat for you, covering such sums and potentially saving you from financial ruin down the road.
Another type is the Comprehensive Coverage. This kind of coverage pays for damages that were not caused by accidents such as fire, catastrophe, hail, explosion, falling objects, vandalism, rioting, theft or contact with animals. This type of coverage also has a deductible and most insurers will only pay for the value of the car before the accident.
As a general rule of thumb, look at the value of your car meticulously to decide how much comprehensive coverage to buy. Pay attention to the insurance policy. Again, you will not want something more than you need, or less.