Auto insurance is meant to protect owners and operators of motor vehicles from financial loss. Cars, trucks, motorcycles and other vehicles are big investments. In low to moderate median income communities, their value represents a substantial part of a family’s assets. Drivers should be covered against damage to their own vehicle and against their medical expenses, and also against damage to other property and possible claims resulting from injury to others. To do its job, an insurance policy must address certain key elements.
Liability to others
As a matter of public policy, most jurisdictions require drivers to be covered by a minimum amount of liability insurance . Liability can include damage to someone else’s property, whether a vehicle or something else like a mailbox or a window. It can also include medical bills that are the result of an accident, and in some places even lost wages or other amounts. Some drivers choose to cover liability insurance well in excess of the minimum.
Medical payments coverage is an auto insurance option that covers payment for bodily injuries due to an accident covered under the policy. These are usually injuries to persons in the policy holder’s car. This coverage usually has no limit, but does have a cap on total payout.
Costs to the driver
Financial loss resulting from damage to an automobile that is not the result of a collision can also be devastating. This includes a tree falling on the car, damage from a flying rock or even hitting an animal. It also covers fire damage and theft. The cost of comprehensive insurance to cover these expenses depends on the level of deductible the policy holder chooses as well as other factors that influence the price of the policy as a whole. This type of auto insurance is optional in most places, but quite desirable for vehicles of any value.
Collision or accident insurance covers costs from damages to the policy holder’s vehicle that result from an auto accident. Like comprehensive insurance, collision coverage is optional in most jurisdictions, but it is a very good idea if the cost of replacing a vehicle would present a financial strain. Also like comprehensive coverage, collision insurance costs vary according to a number of factors, one of which is the level of auto insurance deductible that the purchaser selects.
Another possible problem for auto owners occurs when a relatively new car is totaled. Since the value of a new vehicle plummets as soon as it leaves the lot, the car may not be worth what is owed on it, and the payment may not equal the replacement cost. To protect owners from such situations, gap insurance covers the difference between the value of the vehicle and the amount remaining on the loan.
Choosing the right combination of auto insurance features means balancing several elements. Determining which is crucial to a driver’s particular situation and which would represent an extravagance involves careful thinking, followed by comparison shopping to find the most economical policy that includes the key elements required.