Purchasing auto insurance is a way of protecting the investment you've made in the vehicle you own. In some U.S. states, it's also required that you carry a minimum amount of coverage in order to guard against the possibility that you cause an accident, Looking at coverage options, however, can leave you feeling unsure of what it is you're buying. By learning about these four key insurance concepts, you'll have an easier time when you next talk with someone at an insurance agency.
Injury and Damage
The two primary things you're trying to insure against are injuries and damage. Policies can be drawn up to address a wide array of issues, including medical expenses after accidents, vehicle repair costs and even damage to property.
Types of Coverage
There are 5 common types of auto insurance coverage that are offered. These are liability, collision, comprehensive, personal injury and uninsured/underinsured motorist coverage. Most policies include some overlap between the five.
Liability only covers other parties' expenses in the case that you're at fault in an accident, leaving you to pay for your own costs. Collision covers both you and other parties, but it doesn't cover random incidents. Comprehensive insurance is considered full coverage, addressing both accidents and non-accident events, such as hail damage to your vehicle. Personal injury covers medical expenses related injuries that you and any passengers might have suffered, but it's not offered in all states. Uninsured/underinsured motorist covers the difference if another driver is at fault in an accident but doesn't have enough coverage to pay your expenses.
Depreciation
One thing you're not typically covered against is the depreciation in value of your car. This is one of the reasons that it's a good idea to visit your insurance agency every one or two years to reassess your position and have them make adjustments as the value of your ride declines.
Book Value and Totaling a Car
When the insurance company calculates whether to pay your out for the full value of your car or have it repaired, they conduct a simple calculation. They evaluate the book value, usually using the Kelly Blue Book price guide for cars, and then they compare that to the proposed repair cost. If the book value is lower than the total repair cost, the car is considered to be totaled and a payout settles the claim.
For more information about auto insurance, contact a local insurance company in your area.
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