These are the Three Essential Parts of an Auto Insurance Policy
1: Other Party
Auto insurance Bodily Injury (BI), Liability (PD) and Property Damage (PD), coverages are legally required in many states. (BI & PD). Most people know they need BI & PD coverage, but don’t know how to decide how much.
This is a simple question to ask: What if your car were involved in an accident that resulted in someone being injured or killed? All your belongings are in the back seat and could be sued. What do you think your family would sue for? $15,000? $25,000? $100,000, or maybe even a million dollars! How would you find the money to pay them for their services?
Maybe the equity in your home would be a good idea? What about your savings and/or investments? In most states, you could have as much as 25% of your wages attached in order to pay the award. Do you feel ready to give up everything to pay for an award? You don’t need auto insurance?
2: You and your Family
Let’s change the situation. You or someone you love is often the victim of an auto accident. If the driver who hit you didn’t have enough or auto insurance, where would you get the money? If you have health insurance, medical bills are covered. However, health insurance does not cover permanent disability, loss of life or pain & suffering.
You may have life insurance through your employer, or you might have your own life insurance. Does the amount of your benefit cover your family in case your loved one dies? Even if you have life insurance what will pay for the suffering, the misery and pain, or the fact that a loved one is unable to walk again?
If you are lucky enough or have good financial advice, you might be able to get disability insurance through your job. Disability insurance does not cover loss of life, pain, suffering, or permanent loss of your arms, legs, or hands.
These things are covered only by Un/Under insured motorist coverage. This coverage is limited to the coverage you have in your Liability coverage. The best way to determine how much coverage you require is by consulting your auto insurance agent.
3. Your Car
Comprehensive and Collision coverage are the third component of auto insurance policies. They are also sometimes called “Full coverage”. The difference is that Collision coverage covers you if you hit the tree. Comprehensive coverage is available if the tree comes into your path (hypothetically). Comprehensive coverage also covers vandalism, fire, theft, and broken windshields. The premium will be lower if you have a higher deductible (or risk) than you are willing to take. You can save money by purchasing higher limits for the coverages that will protect you and your family.
To determine the right auto insurance coverage, you must first consider your household budget. A meeting with an auto insurance agent is a great place to begin in determining the right auto insurance coverage for you family.
Cut-rate companies are focused on one thing: price. They’ll ask you about your coverage and see if you can get the same coverage at a lower price. You are now an insurance professional. This is fine if it is your only need. You should seek professional advice if this is not the case. They can help you decide the right amount of coverage and the best way to achieve it.
These tips will help you make sure that your auto insurance policy covers all of your needs.
