| How much insurance should you
buy? First, learn the mumbo jumbo of car insurance terms Make
sure your insurance policy provides the right coverage for you. Insurance is not a
one-size-fits-all product. Different drivers need different types, and levels of
coverage. Here's a quick overview on what insurance terms mean and what you need to buy.
Liability Insurance pays for
damage, injury or death caused by you, any driver on your policy or anyone driving your
car with your permission. Many states, like Texas, require ALL drivers to purchase
liability car insurance.
Collision Coverage pays for
damage to your car no matter who caused the accident. The insurance company must
pay up to the value of the vehicle less the deductible.
Comprehensive Coverage pays for
damages to your car not caused by collision often when your car isn't moving. This
can include someone throwing a rock through your windshield when it's parked, theft,
vandalism, or hail damage from a storm.
Uninsured/Underinsured Motorist pays
for your injuries and property damage in hit and run accidents, and accidents with
uninsured motorists. Coverage also pays if your medical and car repair bills are higher
than the other driver's liability insurance.
Medical pays limited medical
bills and funeral expenses for you and any passengers injured in you car. You are also
covered when riding as a passenger in someone else's car, or if you are hit by a vehicle
while on foot.
Personal Injury Protection (PIP) is
similar to medical payments coverage, but includes lost wages.
Additional coverage can include
reimbursement of towing fees and if you need a rental car while your other car is being
repaired.
Tips for Saving Money
on Coverage
 Increasing your deductibles and the amounts of a particular
coverage are easy ways to save. If these sound like good options, be sure to identify what
level of risk you are comfortable assuming. Some people hate taking chances. Others can't
afford to. For these two groups, a $1000 deductible on collision and comprehensive,
probably wouldn't be the best bet. At any rate, do the math. Be certain that your monthly
income and expenses lend well to your deductible and payout levels.
Don't over-insure Old Betsy
Dropping comprehensive and collision coverage on an older car is one
more way to reduce your car insurance premium. You may also want to eliminate additional
coverage on a car that is paid for. The "Blue Book" value for your vehicle will
give you a good idea of whether it is worth  covering. Don't even bother
with towing or rental coverage if you belong to an auto club that provides these services.
If you are not a member, give a second thought to keeping them. Their costs are relatively
small and usually pay for themselves if you ever have to use them.
Lastly, you can eliminate PIP and medical payments from your coverage
list if you already have health and disability insurance. However, they do cover other
people who may be injured in you car during an accident, so think about keeping them just
in case. |
