Know what kind of coverage your money buying from your car insurance company? Although you may be buying a single insurance policy to cover a specific vehicle, a number of components determine the final cost:
Bodily Injury Liability: Covers injury and death claims against you in the event you are sued because of an accident. It covers legal expenses and legal if your car injures or kills someone.
Property damage liability: Covers claims for property that may have been damaged in an accident. Because liability coverage protects the other party, it is required in all but three states.
Medical payments: Pays for injuries to occupants of your car and yourself in the event they are necessary. This is optional in most states. In "no-fault" states, personal injury protection replaces this type of basic coverage.
Uninsured motorist protection: Covers injuries caused to you and/or the occupants of your car if your hit by uninsured motorist or a hit-and-run driver. "Under-insured motorist" coverage is also available. This is designed to cover claims you make against a driver who is inadequately covered. In some states, statistics show that as many as 30 percent of U.S. drivers are uninsured.
Collision coverage: Covers damage to your vehicle up to its current book value. Collision coverage carries a deductible, which is the amount per claim you would have to pay before the insurance covers the rest. The lower the deductible, the higher the premium. The extra expense is usually worth it. While it's legally optional, a lending institution or leasing company always requires collision coverage.
Comprehensive (Physical Damages): Covers damage to your vehicle that is the the result of theft, fire, wind, vandalism, flood, and/or other non-collision related causes. Comprehensive also carries a hefty deductible.
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