Auto insurance basics

You now have to have insurance on your vehicle in order for it to be on the road legally. Some states may have different laws so always be sure to check the laws within the state that you live in. Why do you need to keep insurance on your vehicle? Besides the fact that it is the law, it covers you and any damage that you may do and the damage that you might have done to someone else or their property.  Let’s take  a look  to the breakdown of your insurance policy and what each part means and cover. Again, any questions or concerns check with your local law enforcement or you can check with your local auto insurance agent that you have your policy with.

1. Comprehensive – This term we hear a lot when someone is talking about auto insurance. This term refers to coverage in the event that your vehicle is stolen or damaged in ways that did not involve a wreck. The bank will usually require you to have this if you have an auto loan for your vehicle.

2. Collision- This is another term that you hear often when discussing auto insurance. This will cover any damages that may occur if you hit another vehicle with yours or you hit an object. This is also another one that if you have an auto loan through your local bank, they may require that you carry this type of coverage as well.

3. Uninsured/Underinsured Motorist (UM/UIM) – This is a two part and is not required in most states. You will be asked to sign a waiver in most states if you decide not to select to have this coverage stating that you are opting not to have this on your auto insurance. This will cover you in two ways; this can cover any medical or any other expenses that may occur during an altercation of vehicles. Or if the motorist involved (other party) in the accident you are in does not have enough insurance or an adequate amount of insurance, this will cover the balance of what is needed to cover the remainder of the cost of the expenses, damages.

4. Medical Payments Coverage (MED Pay or MPC) – This is a simple coverage and does not have to be taken when putting your auto policy together for your vehicle. What this does is covers any medical expense that you are any passengers that are with you at the time of the accident occurs. It does not matter which party is at fault, it will cover you either way.

5. Bodily Injury Liability (BI) - This is required by law, but the amount that is required for you to carry on your auto insurance policy can vary depending on state law and what they require. This protects you if you are in an accident to where other parties are involved and they are either hurt or if someone within the other party has been killed. Of course, the higher the amount the more that would be covered for this type of expense. The minimum requirement that you can carry is 100/300 which breaks down to and means that $100.000.00 will be covered per person and $300,000.00 will be covered per occurrence.

6. Property Damage- This is another one of where in most states is optional to carry on your auto insurance policy, but if you make the decision to carry would be very beneficial as well. This will cover you in the event that you happen to do any damage to someone else’s property with your vehicle. Examples would be hitting a parked vehicle, fence, building or anything that was on their property at the time of when the accident occurred that you hit. If you decide to select this when building your auto insurance policy, the more that you carry, the better chances that what you have done damage to will be covered, so that there are no out of pocket expense.

Posted in Auto Insurance

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