Understanding The Basics of Automobile Insurance

Liability coverage: The amount of liability insurance a person must carry on their vehicle depends on the state they reside in. For example in Arizona it is 15/30/10. You might be asking what these numbers mean, given in thousands of dollars. The first number 15, is the maximum amount of money the insurance company will pay for one individual injured in an accident which would be $15,000. The second number of 30, $30,000 is the maximum amount of money the insurance company will pay for the total number of individuals injured in an automobile accident. The number 10, $10,000 is the total amount of money the insurance company will pay for property damage from the automobile accident. If the liability should go above the amount you are covered for, you are responsible for paying the remainder.

You do not have to buy the minimum requirement of liability insurance for the state you reside in. It is highly suggested people carry more than the minimum requirements. You should review the circumstances in your life to figure out how much coverage you should carry. Generally the more assets you have the more insurance you should carry.

Collision coverage: This insurance pays for damage repair if your vehicle is deemed “totaled” by the insurance company. This can also mean the replacement value of your vehicle if the accident was considered to be your fault. Collision coverage is the largest cost of your insurance premium. It is a wise decision to carry collision coverage if you have a new or almost new vehicle. If you are leasing or financing a vehicle it is a mandatory coverage. There are different deductible amounts you can choose from with collision coverage.

Comprehensive coverage: This covers your vehicle from damage or loss from things such as floods, storms, theft or fire and other acts of God. Usually comprehensive insurance is about a third of the cost of what collision is. There are different deductible amounts you can choose from with comprehensive coverage as well. If your vehicle is an older model, just as with collision coverage, it might or might not be beneficial to include in your policy. If you have a vehicle that is considered to be rare or an antique you should seriously think about your decision. For example if you own a vehicle that is a 1999 Nissan Quest mini-van and Kelly Blue Book shows it has a value of approximately $3,000 then comprehensive coverage will likely cost you more than the vehicle is worth in a short amount of time of paying on the policy each month. If your vehicle happens to be a 1969 GTO in pristine condition and you find the value of it is somewhere in the neighborhood of $65,000, then comprehensive coverage is likely an option you want to include with your policy.

Medical insurance payments: If you already have health insurance coverage through your employer or from a private policy you pay for, this might not be an option you want to include in your automobile policy. This coverage pays for medical bills from injuries you sustain in an accident.

Some of the factors insurance companies consider when rating your insurance: If you have a poor driving record with a history of moving violations, accidents, or DUI’s, you will pay the price with your total insurance cost. Your sex, age, and whether or not you are married are other determining factors for the amount of premium you will pay. Location of where you live is also considered as is the make, model and year of your vehicle.

Purchasing insurance on the Web or by telephone from a discount insurance company, might save you money if your driving record is good.

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