Basics Of Car Insurance Coverage

Choosing auto insurance that fits your needs and the needs of your family is important, so get to know the basics. And always get quotes from reputable car insurance companies.

An auto insurance policy is a contract between you and an insurance company. You, the customer, pay a certain amount (“premium”) to the insurance company in exchange for a set of coverages you selected. Your policy sets forth what the insurance company will or will not cover.

http://www.dreamstime.com/-image18515498Auto insurance typically provides four basic things—liability coverages (for injuries to others and damage to their property), coverage for damage to your car or cars, coverage for medical expenses and uninsured motorist coverages (for situations where someone without enough insurance injures you or a family member). The main coverage types are

  • Bodily injury liability coverage generally pays damages for bodily injuries to the driver and passengers of the other vehicle when you are responsible for an accident. It also provides coverage to defend you if you are sued because of an auto accident.
  • Property damage liability coverage generally pays for damages to another person’s property (e.g. their car) when you are responsible for an accident.
  • Medical payments coverage generally covers you, household relatives and your passengers for medical expenses that result from injuries sustained in an auto accident.
  • Uninsured or underinsured motorist bodily injury coverage generally pays for damages for bodily injury to you and your passengers when caused by another in an auto accident and the person legally responsible either has inadequate or no insurance.
  • Collision coverage generally pays for damage to your car if it hits another car, object, or overturns. A deductible applies to this coverage.
  • Comprehensive coverage generally pays for damage to your car if it is stolen or damaged by certain causes other than collision, such as fire, theft, hail or vandalism. A deductible applies to this coverage.

An auto policy generally consists of three main parts, which together, form your auto policy:

  1. Declaration page – the declarations page (or “declarations” or “dec page”) displays information specific to you and your policy. This will usually include the name of the policyholder, your policy number, the policy term, limits of liability and deductibles you selected and the policy premium. It can also display other items such as discounts applicable to your policy, other drivers on your policy and specific vehicles insured.
  2. Base Policy – this document spells out the basic provisions of the insurance coverage and the responsibilities of the insurance company. It also sets forth your responsibilities, which include paying your premium and telling the company when you are in an accident.
  3. Endorsements – endorsements alter the base policy, just like an amendment alters a contract. Endorsements can add, broaden, limit or delete coverage or change the base policy in any other way.

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<a href=”https://plus.google.com/117864810135968472275″ rel=”author” title=”blog title”>by Ciprian Gurgu</a>