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Car insurance policies varies from state to
state. They are consisting of a package of different coverage elements which
together form your policy. Most states require you to carry automobile
insurance, at least liability coverage on your auto. (This is to protect
the person you hit, not you.) If you intend to protect your own auto, assets or
personal property against loss it would be advisable to purchase more than
just the minimum liability coverage. Given to high cost of replacing a
automobile today, collision and comprehensive coverage are included in
most automobile insurance policies.
Auto insurance policies
normally include coverage for up to six distinct risks, each of which is
priced separately.
Bodily Injury Liability
For injuries the policy holder
causes to someone else.
Liability coverage is the foundation of any auto insurance policy, and is
required in most states. If you are at fault in an accident, your liability
insurance will pay for the bodily injury and property damage expenses caused to
others in the accident, including your legal bills. Bodily-injury coverage pays
for medical bills and lost wages. Property-damage coverage pays for the repair
or replacement of things you wrecked other than your own car. The other party
may also decide to sue you to collect "pain and suffering" damages.
Medical Coverage
Medical and Personal Injury Protection (PIP)
for treatment of injuries to the driver and passengers of the
policyholder's car. At its broadest, PIP can cover medical payments, lost
wages and the cost of replacing services normally performed by someone
injured in an auto accident.
This will pay for your and your passengers' medical expenses after an
accident. These expenses can arise from accidents while you're driving your car,
someone else's car (with their permission), and injuries you or your family
members incur when you're pedestrians. The coverage will pay regardless of who
is at fault, but if someone else is liable, your insurer may seek to recoup the
expenses from him or her.
Personal injury protection (PIP) and broader "no-fault"
coverage are
expanded forms of medical payments protection that may be required in your
state. Some states have optional PIP or no-fault coverage. Expanded features
include payments for lost wages and child care.
If you have a good health
insurance plan, there might be little need to buy more than the minimum required if at all. And, if you
already have disability insurance, there's little reason to purchase
higher-than-minimum amounts of PIP.
Property Damage
For damage the
policyholder caused to someone else's property.
Collision
For damage to the policyholder's car from a
collision.
If you cause an accident, collision coverage
will pay to repair your vehicle. You usually can't collect any more than
the actual cash value of your car. Collision coverage is
normally the most expensive component of auto insurance. By choosing a higher
deductible, say $500 or more, you can keep your premium costs down. However,
keep in mind that you must pay the amount of your deductible before the
insurance company kicks in any money after an accident.
Comprehensive
For damage to the policyholder's
car that doesn't involve a collision with another car. Covered risks
include fire, theft, falling objects, missiles, explosion, earthquake,
flood, riot and civil commotion.
Uninsured motorists
For treatment of the policyholder's
injuries as a result of collision with an uninsured driver.
Uninsured motorists (UM) coverage pays for your injuries if you're struck by
a hit-and-run driver or someone who doesn't have auto insurance. It is required
in many states.
Underinsured motorists (UIM) coverage will pay out if the driver who hit you
causes more damage than his or her liability coverage can cover. In some states,
UM or UIM coverage will also pay for property damages.
You'll probably want to have at least the minimal amount of UM/UIM because if
you can't find the other driver, you'll at least have some coverage for
pain-and-suffering damages.
No state
requires car owners to carry insurance for all these risks. But many
states require drivers to carry minimum amount of liability insurance for
bodily injury and property damage, as well as personal injury protection
coverage.
Add-on Elements
Car
rental coverage,
Towing car coverage, Auto replacement gap coverage.
Check the state pages for individual
states' auto insurnace policy and law.
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