If you own a car, it goes without saying that car insurance is an absolute necessity. To put it simply, one car accident can wipe out the savings of a lifetime and being pulled over just once without insurance can lead to an overwhelming amount of fees. With that being said, the various types of insurance plans and coverage available can easily exhaust anyone who is not familiar with the insurance terminology. While car insurance gets a bad rep for being expensive, there are ways to afford the exact coverage you need without breaking the bank. To help you decide the car insurance coverage that is right for you, below are the common types of coverages and their details.
Collision: Collision covers the insured person's car in case of an accident, regardless of is found to be at fault for the accident. A deductible of up to $1000 is usually associated with collision coverage. In case of an accident, anything up to the deductible value has to be borne by the policy owner. Anything beyond the deductible will be paid for by the insurance company, up to the value of the vehicle. The higher the deductible taken, lower the premium will be.
Comprehensive: Comprehensive insurance covers the insured person's car and property inside the car for damage or loss resulting from other agents like fire, floods, vandalism and theft. This generally includes glass coverage as well, which is damage to windshield and windows of the car. Comprehensive coverage also has a deductible similar to the collision coverage.
For new vehicles, it is a good idea to take both collision and comprehensive coverages with low deductible limits. In fact, both these coverages are generally made mandatory for new cars bought on vehicle loans, to protect the lender. As the car grows older, raising the deductible limits will save you money. Experts recommend dropping both these coverages when their combined annual premiums add up to more than 10% of the value of the car.
Uninsured and Under-insured coverages: These cover the insured person and the passengers of the car for pain, suffering and loss of wages resulting from an accident, if the driver at fault has no insurance or inadequate insurance. Experts recommend taking these coverages up to the highest available limit, as the premium addition due to these coverages is not much.
Collision: Collision covers the insured person's car in case of an accident, regardless of is found to be at fault for the accident. A deductible of up to $1000 is usually associated with collision coverage. In case of an accident, anything up to the deductible value has to be borne by the policy owner. Anything beyond the deductible will be paid for by the insurance company, up to the value of the vehicle. The higher the deductible taken, lower the premium will be.
Comprehensive: Comprehensive insurance covers the insured person's car and property inside the car for damage or loss resulting from other agents like fire, floods, vandalism and theft. This generally includes glass coverage as well, which is damage to windshield and windows of the car. Comprehensive coverage also has a deductible similar to the collision coverage.
For new vehicles, it is a good idea to take both collision and comprehensive coverages with low deductible limits. In fact, both these coverages are generally made mandatory for new cars bought on vehicle loans, to protect the lender. As the car grows older, raising the deductible limits will save you money. Experts recommend dropping both these coverages when their combined annual premiums add up to more than 10% of the value of the car.
Uninsured and Under-insured coverages: These cover the insured person and the passengers of the car for pain, suffering and loss of wages resulting from an accident, if the driver at fault has no insurance or inadequate insurance. Experts recommend taking these coverages up to the highest available limit, as the premium addition due to these coverages is not much.
Tim McKinley is a contributing writer for cheapestcarinsurance.org, a site which compares rates and coverages. It also clears up the misconceptions about car insurance with the car insurance groups explained portion of the site.
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