When it comes to auto insurance, many people are easily confused by the different types of coverage available. To help you understand these coverage types better, they are listed below with definitions and explanations for your benefit.
Liability Cover. Liability coverage pays others for damages resulting from a car accident that you cause. It also pays for a lawyer to defend you if you are sued for damages.
Comprehensive Cover. Auto insurance comprehensive coverage covers damages to your car that are not caused by other motorists, including fire, theft, vandalism and storms.
Collision Coverage. Collision coverage is intended to cover losses to your car when you are involved in a collision with another car or with a stationery object.
Uninsured/Underinsured Cover – Uninsured driver coverage covers your medical expenses and those of your passengers (and in some states property damage as well), in an accident caused by a hit-and-run driver, a driver with inadequate insurance, or a driver with no insurance at all.
GAP Cover – When you buy a new car or even a fairly new used car, it\’s vale will depreciate by at least 20% when you drive it off the lot. So, on a $30,000 car your auto insurance company will only pay out $24,000 at the most in the event of it being stolen or totalled, yet you will still have to pay off the $30,000 loan. If you have GAP cover than you will be able to recover the $6,000 difference.
Personal Injury Protection (No Fault). This form of cover is only required in \”no-fault\” states but is optional in others and covers injuries to yourself and others in your vehicle regardless of fault.
Pay-Per-Mile – Pay-Per-Mile insurance is a novel approach to possibly saving money on car insurance. With this type of insurance the price of your premium would be directly linked to the number of miles you drive. The fewer the miles, the lower the costs would be. This sounds promising, but it does suffer from two major drawbacks. Firstly it is available in very few states (around 12 at the time of writing) and secondly it involves the insurance company fitting a tracking device to your car.
With the Internet easily accessible you have a vast amount of knowledge at your fingertips to help you choose the best coverage for you and your lifestyle.
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