What is auto insurance?
Owning a car involves
several risks. When a car accident occurs, people may be injured and vehicles
(or other property) may be damaged. Damage can also occur through theft,
vandalism, or natural disasters. Auto insurance can protect you against
the financial loss associated with these risks. Insurance companies provide
auto insurance through personal auto policies. A personal auto policy
is a contract between you and your insurer, specifying each party's rights
and obligations. Essentially, your insurer promises to provide specific
coverage for you. In return, you pay a premium.
Why do you need it?
State law (and/or your car's lender) often requires
you to purchase at least a minimum amount of auto insurance. You may find
it sensible to purchase greater coverage, however, in order to protect
your auto investment, pay for necessary medical expenses, cover your legal
liability, and cover any additional losses related to driving. Consider
the following: if you cause an accident and the other driver suffers damages
over and above your insurance policy's limits, your personal assets and
future earnings may be put at risk.
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What do you need
First of all, it's important for you to know
how to read and understand an auto insurance policy. Next, you'll want
to carefully balance cost against desired coverage. Finally, you should
allow us the opportunity to evaluate and compare the various car insurance
products you want or have, to ensure that you get the best value for your
Understanding your personal
Your policy is broken into simplistic and logical sections. It discusses
types of coverage, rights, and obligations under the policy, as
well as exclusions or limitations. Types of coverage include liability
coverage (injuries/damage you cause to other people and other property),
medical payments coverage (medical expenses that will be paid--up
to a specified limit--regardless of fault), uninsured/underinsured
motorist coverage (losses caused by a driver who is uninsured or
has inadequate insurance), and coverage for damage to your auto
(accident damage and other damage or loss).
What is a deductible?
Regarding damage to your own auto, collision and comprehensive coverages
may each include a deductible. A deductible is basically a risk
that is self-insured. It's an amount of money that you are required
to pay before your insurance kicks in. Deductibles can come in any
dollar amount, but are generally $100, $250, $500, or $1000.
Coverage vs. cost
You will always want to balance coverage against cost. Choosing
the appropriate level of coverage depends on a number of factors,
including the value of your vehicle, the value of assets you must
protect, the amount of money you can afford to pay out-of-pocket,
and your tolerance for risk. If a claim against you exceeds your
coverage limits, you will be personally responsible for the amount
that exceeds the coverage. As a licensed independent agency we can
tailor the policy to fit your needs. To arrive at the cost of your
premium, the insurer will consider the coverage levels you select
and will use statistical information about you, the area you live
in, and your car.
Evaluating and comparing
Compare policies in terms of coverage, exclusions, the reputation
of insurer and then price. If you ever find yourself shopping for
different quotes, make sure you are comparing extremely similar
policies. Also, weigh the policy cost against both coverage and
the quality of service provided.
When to get it
You may need to purchase auto insurance whenever
you buy a new or used car. You may also need to reconsider your present
policy if your family situation changes. Because marital status, number
of children, and asset levels may change over time, you should try to
review your existing policies from time to time to ensure adequate coverage
is always maintained.
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