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Four Important Parts of A Car Insurance Policy

by Amy Walters

Regardless of if you have had a car insurance policy in your name before or not, you need to understand the different coverage aspects that are a part of a good policy. Once you understand these different aspects, you can make educated decisions regarding your auto insurance, which can save you time, money, and heartache when you are looking for the right policy. Make sure that you are aware of these four segments so that you can choose the right parts and the right levels when it is time to cover you and your vehicle.

  1. Collision Coverage – This is one of the most important forms of coverage when you are building a car insurance policy for any vehicle that has a worth of over a few grand. Collision pays for damage and loss when a vehicle is hit or hits something in the course of an accident. Since this payment is determined by the worth of the vehicle, it is important to only get collision where it makes sense. If your vehicle is really only worth a thousand dollars, then paying for collision coverage on the vehicle makes very little sense, especially if your deductible ends up being more than the vehicle is worth.
  1. Comprehensive Coverage – Comprehensive coverage is specifically designed for people who want to expect the unexpected. There are many reasons that you might want to carry comprehensive coverage, including the fear of a natural disaster in your area. If you live in a place that is prone to crime, hurricanes, earthquakes, or other events that are totally out of your control, then you might want to opt for coverage that will pay for damages and loss associated with these things.
  1. Liability Coverage – Liability coverage is generally required when you own a car. This is important, as most states have liability minimums that have to be met when you insure a vehicle. This is, in fact, the only part of an insurance policy that is required by law unless you have a vehicle that is being financed. Liability insurance will cover damage and loss that you do to other peoples’ property if you are in an accident. It also covers the cost of a lawyer if you are sued in relation to the accident.
  1. Add On Coverage – Multiple other levels of coverage exist for people who need specific things on their policy. For example, you can get coverage against motorists that don’t have insurance, or you can get higher levels of comprehensive, collision, and liability so that you have a higher maximum before things begin to pile up on you personally. There are also stipulations that provide towing and even a rental car depending on what kind of add-ons you add to your overall policy.

Car insurance really isn’t a difficult thing to understand, but there are four aspects that you should know about. Consider these things when you begin your search for auto insurance and you will easily be able to get a policy to cover all of your needs today.

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