Understanding Your Car Insurance Coverage

Car insurance coverage can be confusing but, by studying the different types of coverage available, you can save yourself a world of trouble and heartache.

According to the US Bureau of Transportation, almost 80% of Americans rely on cars to commute to their jobs and the average American household owns between one and three cars. Cars are also extremely expensive and, sooner or later, many cars will be involved in a collision or suffer damage related to acts of nature, vandalism or other occurrences. Auto insurance is a tool that helps drivers cover the financial aftermath of any unfortunate auto-related incidents.

Liability Coverage: This Essential Coverage Can Protect You From Lawsuits

There are two types of liability coverage:

1. Bodily injury, takes effect if you injure or kill someone as a result of a collision

2. Property damage, takes effect if you damage someone else's property with your car

Some form of liability coverage is mandatory in all states except VA, NH, SC and WI. The amounts of coverage required vary from state to state. In many states, the minimums are quite low so, if you can afford the premiums, consider getting more than the minimum liability coverage. This will help protect your assets if you cause a collision which results in injuries or property damage that exceed minimum liability coverage amounts.

Personal Injury Coverage Is a Must, Especially If You Don't Have Health Insurance
Personal injury protection, no fault or medical payment coverage will pay for medical expenses that you and your passengers incur as the result of an accident. This can literally be life-saving, particularly if you or your passengers don't have health insurance.

Comprehensive and Collision Coverage Will Pay for Damage to Your Car
If a hurricane hits and your car is damaged by a flood, you will pat yourself on the back for having comprehensive coverage. Ditto if your car is stolen, damaged by animals or damaged in a fire. Comprehensive coverage doesn't pay for damage done to your car in a collision.

Collision coverage pays for damage done to your car in a collision with another vehicle or an object.

Comprehensive and collision coverage are necessary if you can't afford to replace your car out of pocket. If you have a car with of little value that you can afford to replace, you don't need comprehensive or collision coverage as long as you don't mind dipping into your savings to replace your car. To save money on your collision and comprehensive coverage, choose a policy with as high a deductible as you can afford.

Uninsured Motorist Coverage Protects You From Others' Negligence
Uninsured motorist coverage will allow you to collect payment from your own insurance policy if you're involved in a collision with an uninsured motorist. The number of uninsured motorists on the road is astounding. In many states, including California, Texas and Colorado, approximately one third of drivers on the road are uninsured. Responsible motorists must pay the price for these driver's negligence, either out of pocket or by carrying uninsured motorist coverage. This coverage is mandatory in only a few states but it would be wise for everyone to get it whether they are required to or not.

Rental Reimbursement Coverage, Glass Coverage and Other Extras
Auto Insurance companies offer all kinds of add-on coverage, from towing and rental car reimbursement to glass insurance coverage that will pay for broken car windows. These add-ons are the icing on your coverage cake, but are not as essential as the other types of coverage available. Often, you'd be better off keeping a little extra money in your savings account to pay for towing or a broken windshield rather than paying premiums to buy insurance to cover these types of events.

Automobile insurance coverage is something that every car owner should have. It can help to give you peace of mind and may even protect you from financial ruin. Thinking carefully about what types of coverage you should have will make car ownership more of a pleasure and less of a headache.

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