Before we decide to purchase a particular policy for car insurance, we need to understand the different insurance policies and what they cover. We can’t just shop for insurance on the basis of your monthly premium alone. It is critical that we know the answer to questions like:
What Is Comprehensive Auto Insurance?
What Is A Automobile Insurance Deductible?
What Is Full Coverage Automobile Insurance?
What Is Auto Liability Insurance?
Comprehensive car insurance is the part of your auto insurance policy that pays when your automobile is damaged by a falling object, damaged by fire, stolen or vandalized. Shattered glass is also covered under the comprehensive section of a personal auto insurance policy. Comprehensive coverage is also called “other than collision” coverage.
It is the liability section of your auto insurance policy that pays other parties you might have an automobile crash with. Comprehensive coverage only pays you.
Therefore it is optional unless your auto is leased or has a lien on it. If your auto is leased or financed, the lessor or lender will probably mandate that you maintain comprehensive coverage on your car.
A car insurance deductible applies to the comprehensive part of your policy and the collision section of your policy. Both of these parts of your auto insurance policy are optional. The deductibles for each can be different. Your deductible reduces the amount your insurance company will pay to repair or replace your automobile. If you have $3,000 worth of body work done on your automobile due to a covered accident and have a $500 deductible, your insurance company will pay you $2500.
The higher your deductible is, the lower your premium is likely to be.
Full coverage auto insurance is a car insurance policy that includes not only the mandatory liability section, but also the optional comprehensive and collision coverages. These coverages are co
nsidered physical damage coverage. Chances are you will need to have full coverage if you do not own your auto outright. Your lender or leasing company will likely make you sign a contract that forces you to have full coverage.
One way to pay less for your car insurance policy is to increase your deductible on your comprehensive and or collision coverages. This means that you will be more at risk, however on an older automobile, the risk might be manageable and eliminating the physical damage coverage may be a good idea.
Liability insurance for your auto is the part of your policy that can pay the other driver if you are considered to be responsible for a crash. This coverage, or proof of financial responsibility is mandated in every state of the US. Your deductible never applies to this coverage.
Liability insurance is mandatory, but the legal minimum limits may be inadequateto give you substantial coverage if you have an accident that causes a l
ot of damage. Be sure that you not only understand how liability insurance works but that you also get the right amount.
Knowing how your car insurance policy works is critical if you are going to make the right choices.
Alston has been an insurance agent for 20 years.