The Three Basic parts to an Auto insurance Policy
1: Other Party:
Auto Insurance Bodily Injury (BI) Liability and Property Damage (PD) coverage is
Legally required in most states today. (BI & PD) Most people understand that they need
BI & PD, but they have no idea how to determine how much coverage they need.
Try this simple question: What if your car was involved in an auto accident tonight where
heaven forbid, someone else was injured or killed? Remember, everything you own is in the
back seat of the car with you and is at risk in a lawsuit! So, what do you think their family
would sue you for? $15,000? $25,000? $100,000 or even maybe a Million dollars! Where would
you get the money to pay them?
Perhaps the Equity in your Home would help? How about your Savings and/or Investments? You
could even have up to 25% of your wages attached to pay the award in most states! Are you
prepared to sacrifice everything you own to pay an award due to this accident? If not, read
on for how to choose the auto insurance coverage you need.
2: You and Your Family:
Now let’s turn the above accident around. For some unfortunate reason, you or a loved
one is the one who is injured or killed in an auto accident. Where would you get the money
if the person who hit you did not have auto insurance or not enough auto insurance? Medical
bills can be covered if you have health
insurance. But health insurance doesn’t cover loss of life, pain & suffering
or permanent disability.
Maybe you have a life
insurance policy through your employer or your own individual life policy. Is the benefit
amount sufficient to cover your family if your loved one is killed? But even if you have
life insurance, what pays for the misery, the pain & suffering, maybe the fact you
or a loved one can’t walk or use their arms again?
You might have a disability insurance policy through your work if you’re lucky or
had good financial advice. But disability insurance doesn’t pay for loss of life, pain & suffering,
permanent loss of your legs, arm or hand. The only coverage that pays for these things is
a part of an auto insurance policy known as Un/Under-insured motorist coverage. You can only
buy as much coverage here as you have in Liability coverage. Your auto insurance agent should
be able to help you determine the exact amount you need.
3: Your Car
Comprehensive and Collision Coverage are the third part of an auto insurance policy and
are sometimes referred to as “Full coverage.” Basically the difference is this:
If you run into the tree you are covered by Collision coverage. If the tree runs into you
(hypothetically of course), then you are covered by comprehensive coverage. Comprehensive
also covers broken windshields, fire, theft and vandalism. The higher deductible (risk) you
take here, the lower the premium. Use the savings here to purchase higher limits in the coverages
that protect your assets and your family.
The bottom line to determining proper auto insurance
coverage is, of course, the money available in your household budget. An excellent
place to start in determining the proper auto insurance coverage for your family is to
meet with your local auto insurance agent.
Most cut-rate companies concern themselves with one thing only: Price. Tell them what coverage
you have and they’ll see if they can give you the same coverage for less. You become
the insurance professional. If this is the only need you have then that is ok. If not, you
need to seek the advice of a professional to help you determine the proper amount of coverage
you need and how best to accomplish it.
Review these tips for auto insurance coverage to make sure you have enough to protect
your family.
provided by HometownInsurance.com
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