Insurance for Everyday Living: Auto Insurance

Gaurav Bhola, MSM, Managing Editor

Want to turn a smile upside down, just mention the word insurance to someone. The word insurance sends shudders through people, but sometimes insurance is necessary. As consumers needs have changed over time, so have the products offered by insurance companies. There are many flavors for each type of insurance such as life insurance, health insurance, car insurance, business insurance, home insurance, travel insurance, disability insurance, medical insurance, and more. It is critical that you get the appropriate coverage to protect yourself, your family, your finances, and any business.

If you don’t like insurance, just take it as if you would take bitter tasting medicine, you may not like taking it but it is good for you. The essential insurances to consider are health insurance, disability insurance, life insurance, auto insurance, and home insurance. Today, we cover auto insurance:

Auto insurance is critical in protecting you and your family against financial loss in case of an accident. When you purchase a car insurance policy, it is a legal contract between you and the insurance company. In basic terms, you agree to pay the insurance company a premium and in return, the insurance company agrees to cover your losses as outlined in your policy.

Auto insurance includes liability, medical, and property coverage:

Liability coverage of your legal obligations to others for property or bodily injury damage.

Property coverage of any theft or damage to your auto.

Medical coverage of costs of treating injury, thereafter any rehabilitation; may cover lost wages and funeral expenses.

Predominately, auto insurance policies are for six months to twelve months. The insurance company automatically notifies you via postal mail or email when the policy is up for renewal.

An auto insurance policy is made up of six kinds of coverage. Here are the six basic types of coverage:

1. Bodily Injury Liability

This insurance coverage applies to your injuries, the policyholder, the designated driver, and injuries caused to others involved in the accident. You and your family listed on the policy are protected as well when driving another’s car with their permission.

You might want to consider having more than the required state minimum, in case of a serious accident. It is wise to protect your long-term financial plan and not have your home and life savings be used to pay off a lawsuit, borne out of the accident.

2. Personal Injury Protection

This medical coverage pays injury treatment for the driver and passengers of the policyholder's car. It may cover certain additional medical payments, lost wages, and funeral costs.

3. Property Damage Coverage

This covers for damage that you or an authorized driver causes to another’s property. Generally, this entails any damage to the other’s car, but may include damage to other property such as, telephone poles, fences, buildings lamp posts, or any other structures your car hits.

4. Collision Coverage

This covers damage to your car as a result of a collision with another car, or structure and flipping over; as well as damage caused by potholes. After meeting, the requisite deductible, the insurance company pays the rest of the cost of the damage, even if you are at fault.

The rule of thumb is the higher your deductible, the lower your premium.

5. Comprehensive Coverage

This coverage reimburses you for loss due to damage or theft caused by anything other than a collision with another car or structure, such as explosion, falling objects, fire, earthquake, flood, missiles, riot, windstorm, hail, vandalism, or contact with animals.

It also covers any damage to your shattered or cracked windshield.

6. Underinsured Motorist Coverage

This insurance will cover you in case you, a family member, or a designated driver is hit by an uninsured or hit-and-run driver.

It also covers you in case the at-fault driver’s insurance coverage is inadequate to pay for your total loss. Moreover, the coverage will protect you in case you are hit as a pedestrian.

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