Whenever you purchase car insurance, it is easy to simply go with what the company recommends as most people do not have a full understanding of the types of coverage and which ones they need. However, in order to find a cheap auto insurance policy, it is important to only choose the coverage that you need. Understanding what types are available is the first step in choosing what is necessary. Here are five different types of coverage that you will likely be offered:
Liability insurance is the most important type of coverage, and is typically what the law requires. However, the minimum amount required by law does not have to be the amount you purchase – you are free to purchase a higher amount of coverage. Most liability policies provide a minimum of $5000 towards the repair or replacement of a vehicle. This means if you damage a newer car, you will have to pay the balance after $5,000. Most new cars are over $13,000 at least, but many are much more expensive! There are two types of liability insurance to be aware of:
Bodily Injury Liability: The minimum amounts for this type of insurance are typically $15,000 per person or $30,000 per accident. Medical expenses can easily reach into the hundreds of thousands, so this coverage would simply be a drop in the bucket of expenses you are required to cover.
Property Damage Liability: This coverage will apply to damage done to vehicles. As referred to above, the minimum amounts are usually $5,000, but you are free to purchase more.
This coverage will take care of damages done to your vehicle if it is involved in an accident. This type of coverage is not generally required by law, but is sometimes required if your car is financed. If you cannot afford to replace your vehicle on your own, this type of coverage is a good idea. To make it less expensive, consider choosing a higher deductible (but not so high that you could not pay it).
Comprehensive coverage will protect you if your vehicle is damaged in something other than a collision, such as hitting an animal, hail damage, or other acts of nature. Like collision, this is typically not legally required, but is usually a good idea if you cannot afford these repairs on your own. If your car is not worth very much, paying these premiums every month (same for collision) might not make sense, because the amount you would receive for a totaled vehicle will be less than the premium.
This coverage will pay for medical expenses that your health insurance does not pay for. It can protect you and your passengers if you are in an accident.
This is perhaps one of the most importance types of insurance. If you are involved in an accident with someone who does not have insurance, or does not have enough insurance to cover your expenses, this coverage will cover the gap. This means you do not have to rely on others to carry adequate insurance, and you can still be protected.
Shopping online is something many people do every day. However, you might not have considered why shopping online for auto insurance is a good idea. Finding cheap auto insurance is easy when you do it online.