Types Of Auto Insurance

The majority of states require drivers to purchase liability insurance, which will cover damage caused to people and property resulting from a car accident in which you are at fault. There are a number of factors to take into consideration prior to purchasing this insurance. Choosing automobile insurance requires serious thought, both in terms of obtaining the right coverage as well as weighing the associated costs.

Types of Automobile Insurance

Typical automobile insurance can include six different areas of coverage. These six categories of coverage include:

  • Collision Insurance: This covers damages to the coverage holder's vehicle.
  • Comprehensive Coverage: Comprehensive covers losses and non-accident related damages like damage due to a fire, theft or storm.
  • Bodily Injury Coverage: This type covers the driver of the other vehicle's and their passengers when you are at fault in an accident.
  • Medical Payments: This is for both your passengers and yourself.
  • Personal Injury Coverage: Personal injury coverage is not available in every state, but is in "no-fault" states.
  • Under-insured/Uninsured Motorist Coverage: This covers your accident related injuries when another driver has no insurance or not enough.

There are additional types of insurance that you may purchase for car rental reimbursement when your car is in the shop, coverage to replace your windshield, and coverage for roadside assistance.

Size of Your Policy

There are several factors you should consider when deciding how much automobile insurance you will need. For instance, at least three-thirds of the premium you will pay will be put toward your comprehensive and collision coverage. If you have a relatively new car, it's a good idea to purchase enough collision coverage that you will be able to purchase a replacement. However, if your car is really old, it's smart to just eliminate collision coverage. Your premium for both these types of coverage should never exceed about 10 percent of your car's value.

Also, coverage for bodily injury really depends on your overall assets. The majority of states set the requirement at $50,000 in coverage for each person injured and 100,000 for each accident. Most states also require you to purchase a minimum of $5,000 in property damage coverage, although it can be much higher, depending on your state. Lastly, under-insured/uninsured motorist coverage costs very little, so it's worth having.

How Long a Policy is In Effect

Generally speaking, most insurance companies will issue a policy that will be in effect for a year. Many of the companies (such as Kirby Soar Insurance) will permit you to spread out the entire cost of your premium over 12 months with 1/12 being due each month. Also, for added convenience, you can usually arrange for your premium payment to be deducted each month from your bank account.

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