Auto Insurance: Get Yourself Detailed

Auto insurance is a very important aspect of personal finance. Driving a vehicle is necessary for many, yet, auto insurance is something that we don't think about often--usually only when the bill is paid or when a claim needs to be made. Here are a few important requirements to consider when shopping for insurance.

Full Coverage—Comprehensive and Collision

Full coverage insurance is required anytime there is an unpaid balance on the vehicle. The required coverage will be specified through the lender or dealership. Typically, the deductible requirement is $500. The deductible is the amount a person pays before insurance will cover the remainder. The higher the deductible, the lower the monthly premium.

Full coverage insurance will not cover the difference between the value of the vehicle and the balance on the loan. The coverage will be enough to repair the damage to the vehicle. When shopping for auto insurance consider whether or not a rental car or towing is covered in the premium. If those things are important, make sure to add them to the policy. If not, make sure they are not included in the premium.

Uninsured or Under Insured Coverage

Uninsured, or under insured coverage is useful if the driver of the other vehicle is not insured or does not have enough coverage to cover the damage in an accident that is their fault. Property damage insurance is for those without collision coverage, but will not work in the case of a hit and run. Bodily injury protection covers the insured and his or her family while in their vehicle, or in another vehicle. If the insured is hit by another vehicle while walking across the street, he or she is also covered, and the insurance will pay medical bills in addition to lost wages. This coverage can be very useful for motorists.

Liability Insurance

Each state has minimum coverage requirements in order for vehicles to be on the road. Some states require a person have this minimum liability coverage before they can even get their drivers license. Liability insurance covers you in the event that you cause an accident and cause damage to the other person's car. Any damage to your own vehicle is not covered.

Without the appropriate coverage levels, one may suffer from a tremendous financial setback in the event of an accident. On the other hand, with too much coverage, one could pay more than necessary. Not understanding the terminology and what everything means could land a person in a sticky situation with their agent.

Speak to an insurance agent to be sure you understand everything about the current auto insurance policy. Ask questions about anything that is unclear, and don't be afraid to ask for advice. When asking for advice, it is important to be able to recognize the difference between really needing the coverage and the agent trying to boost his or her commission.

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