Car insurance is an unavoidable fact of U.S.-based car ownership. A lot of state regulations require it, and different states require different particulars in the type of auto insurance coverage mandated. On top of that, insurance carriers have multiple tiers of products. It can be confusing, but there are basics common to multiple states.
Basic Liability Coverage
For the states with mandatory minimum insurance coverage, the lowest common denominator is Basic Liability. Liability insurance coverage covers the costs of repairing property damage if you’re deemed to be at fault for an auto accident. Your insurance carrier also covers the cost of most injuries caused by an accident if you’re at fault. Liability insurance has an upper limit in how much it pays out, and damages beyond that level are levied to you, personally. There’s usually a sliding scale where additional liability coverage costs less per dollar of coverage at higher levels, but at very high levels, you’re usually better off with a different product.
Collision Rider Coverage
While liability insurance coverage covers the cost you do to someone else’s property, it does not cover the cost of repairing your own car, or your own medical bills. If you’re at fault for the accident, you’ll be footing those bills on your own. Enter the Collision Rider option, which adds to your monthly premium, but covers the cost of repairing your car, an if your car is rendered unrepairable (the technical term is “totaled”), will cover the cost of a replacement car of similar value. Collision insurance is situational; if you’re already saving up for a new car, and expect to replace a clunker you’re already driving, you’re probably better off putting the additional premium money into the new car fund. If you’re making lease payments or car payments, or cannot get to work without a car, collision insurance is strongly recommended.
Comprehensive Coverage Riders
More happens to cars than collisions with other drivers. Hailstones, hurricanes, theft, or hitting a deer or other animal can wreck a car and aren’t covered by the standard Liability or Collision products. Comprehensive coverage is exactly that – it’s coverage for everything else. It is expensive, and more so than the other two varieties, it’s price will vary on outside conditions, like where you live, local crime rates, and weather patterns. It can get very expensive, but things like anti-theft devices and tracking hardware help a lot.
Uninsured Motorist and Medical/Injury Coverage
Not everyone complies with the law. Uninsured motorist protection is a specialized rider that covers you in case you’re hit by (or hit) an uninsured motorist. It also helps if you’re hit by a driver with a low payment cap on their liability insurance. This is a very useful rider on insurance policies, but it’s often one that gets omitted as a cost-saving measure but even more than other insurance, it’s a case of “when you need it, you’re grateful to have it.”
The decision to get a policy that covers damage by an uninsured motorist isn’t as clear cut as other policies. In theory, even if a driver doesn’t have enough insurance to cover damages during an accident, he will still have an obligation to cover the costs out of pocket. It’s only when the person at fault doesn’t have any money that there can be problems.
Medical Injury Supplemental Coverage
Medical injury supplemental coverage is there to cover the worst possible case – ongoing, permanent debilitating conditions from an auto accident. This covers you if you’re in an accident and your passengers. It is especially common with newlyweds and packages for families with children. In general, a medical injury supplemental policy is less useful than a general health policy; the advantage is that it’s not tied to your employer, or your spouse’s employer, and the two coverages can often provide better care than just one alone.
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