Auto Insurance
What is Auto Insurance?
Auto insurance protects you against financial loss if you have an accident. Your personal auto represents the single largest possible source of catastrophic lawsuits and legal judgements against you for major injuries, death, and property damage. That's why it is so important to spend time setting up a solid car insurance program which will keep you from suffering heavy financial losses.
Auto insurance provides property, liability, and medical coverage:
* Property coverage pays for damage to or theft of your car
* Liability coverage pays for your legal responsibility to others for bodily injury or property damage and is arguably the most important of the auto coverages. The Insurance Information Institute warns that state minimums do not provide sufficient coverage in the event of a serious accident. In real life, accidents cost far more than the minimum limits mandated by most states and if you're deemed legally responsible for bills that exceed the limits of your insurance, the difference will have to come out of your own pocket. If you are a homeowner and have alot of assets--retirement accounts, equity in your house, personal property, savings-- you should buy as much liability insurance as you need to protect your assets to lessen the risk of losing them in the event of a serious accident.
* Medical coverage pays, regardless of fault, for the treatment or injuries to the driver and passengers of the policyholder's car, rehabilitation and sometimes lost wages and funeral expenses
Uninsured/underinsured motorist coverage
No matter where you live, uninsured/underinsured motorist coverage is worth serious consideration. The uninsured motorist coverage in an auto policy comes into play when there is an accident with an uninsured or a hit-and-run driver. Underinsured motorist kicks in when the at-fault driver doesn't have enough insurance to cover all your costs and pays the amount not covered by the other driver's insurance to the maximum of your own policy.
Collision and Comprehensive coverage
Collision and comprehensive insurance are both optional.
Comprehensive pays for damage to your vehicle from causes other than accidents, such as natural disasters, falling objects, theft, vandalism, glass breakage, and collisions with animals.
Collison pays for damage to your vehicle from colliding with another object, regardless of fault.
As a general rule, it can make sense to forgo collision and comprehensive coverage to reduce your overall premium if you have an older car that's lost most of its value. In that case, though, make sure you have enough money saved to replace or repair the vehicle if it's damaged.