Five Things You Should Know About Auto Insurance
In most places, if you’re going to operate a motor vehicle, you are required to have auto insurance. That’s a good thing, because at some point in your life you’re likely to be involved in an accident. While your accident attorney may come to your defense, it’s the insurance company that will likely pay most of the bills. IF you have the right coverage.
Too often, the insurance coverage and options are confusing and you end up with unnecessary or inappropriate coverage. You’re paying for things you don’t need, or perhaps don’t have what you do need. Here’s a review of auto insurance basics to help you navigate your next insurance renewal.
“Limits” refers to the most amount of money the insurance company will pay out in the event of a claim. Many states still allow dangerously low limits. As a result, you could be liable for any excess damages to property or persons. Be sure to discuss with your insurance professional what limit is appropriate for your situation.
The deductible is the amount of a loss that you have to cover before the insurance coverage kicks. Conversely, you might want to think of it as the amount the insurance company is going to DEDUCT from the total amount they allow for your loss. The smaller the deductible amount, the larger your insurance premiums.
In general, liability coverage protects you from paying for damages that you cause to other people or property. Note that it does NOT cover either you or your vehicle. On the other hand, it’s the other person’s liability coverage that will pay for your losses in the event that they are at fault.
Property Damage And Public Liability Coverage
Often, the amount of coverage (the limits) is different for the two kinds of liability coverage, property damage and public liability. As the names imply, property damage covers the other person’s property, while public liability covers injury that the other person suffers as a result of your actions. Hence, it’s not uncommon for property damage limits to be much lower than public liability. It’s easy to understand that when you think about how much a typical vehicle costs versus how much medical bills can add up.
While the core of the policy is to protect other people and their property from damages caused by you, the optional parts of the policy are designed to protect you. Most common among those is what’s called “comprehensive” coverage. It covers your vehicle. You select the deductible amount that you agree to cover before the insurance company begins to pay on a claim.
There are also other optional parts of auto insurance, such as PIP (personal injury protection) which covers your passengers medical bills in the event of an accident. What’s important to remember is that there is no plain vanilla auto insurance. You should take the time to discuss your situation with your professional insurance agent and carefully choose the correct coverages.