Car insurance is viewed by most people as a burden. This burden is imposed on them by State insurance laws. To keep their license, they purchase the minimum required liability coverage and continue driving. They assume that they are fully covered in the event of an accident. Others start by buying multiple car insurance policies and then decide to cut certain coverages. When they find out that their policy does not cover car insurance, they will be shocked to discover that they were at fault in an accident, have their car stolen, or are damaged. These situations can be avoided with a little planning and foresight.
Car insurance is not rocket science. All you need to do is understand the basics of each type of car insurance and decide if it is worth your time. This is especially true for older cars. Do you prefer to pay for comprehensive and collision coverage and all deductibles (at the time of claim), or do you think it makes more sense to just go without and put the premium and deductible money into an emergency fund for your vehicle? You pay for the security of knowing you will be covered in the event of an emergency. Insurance is a risk. It is possible to not use it.
Third party or liability insurance is another area you should consider. This includes your driving skills, your geographic location and your financial ability to pay the other driver for any damages that you may have caused. You might want to consider high-liability car insurance if you drive for long periods, on busy roads, or have an inexperienced driver. For example, the minimum liability for Texas car insurance is 30/60/25 beginning January 2011. One in five people in TX are uninsured, so while you want to be sure you get adequately compensated in case of an accident, you might also want to buy Uninsured Motorist/Underinsured Motorist coverage if you live there.
Umbrella insurance is one the least rated types of car insurance. This is a smart way to increase your coverage. It also comes in handy for potential bankrupting lawsuits. If your car crashes into a school bus, injures someone seriously, or damages a luxury vehicle, you don’t want the cost to be out of pocket. You don’t have to pay too much for $2 million umbrella insurance. It kicks in when your liability coverage is exhausted.
If your car isn’t fully paid for, but you still need to make the majority of the payments, then gap insurance can be a great option. Your full car insurance will not cover the total value of your car. This will take into account the depreciation and blue book values. You will still have to pay the dealer the balance installments, which will make your payments more expensive. Gap insurance helps to fill this gap and pay the balance amount. If you owe the majority of your car’s value, gap insurance is not recommended.
While PIP, or no-fault coverage, is mandatory in certain states, it’s not available in all. After reviewing your current health insurance policy, you might be able to get PIP coverage in your state. The Personal Injury Protection coverage covers medical, funeral, survivor’s loss, and other expenses that arise from an accident, regardless of fault. This is a great car insurance coverage because it considers many factors when calculating your claim account.
Think twice before you buy minimum liability car insurance. Your liability coverage will not compensate you for any injury or property damage that your car causes. You should also look into other coverages for car insurance to ensure you have the best protection possible in the event of an unforeseeable circumstance.