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Understanding a Basic Insurance Policy for Your Vehicle

by nate

Car insurance can be a confusing thing, especially if you are not well versed in all of the language that is included in the policy documents. Thus, it is important to do some research ahead of time so that you can find a policy that meets you needs while being affordable at the same time. The best way to avoid paying for more than you need is to understand the ins and outs of your policy. Here is a basic rundown to help you do just that. 

Understanding Collision Coverage

Collision coverage is one of the basic parts of an auto  insurance policy. It is not required by law, but it may be something that you are required to have by the lender who is financing your vehicle. There are various levels of collision coverage, but they all cover your vehicle in the event that it is damaged in an accident. Unlike other parts of your policy, this coverage will get you money for repairs in order to get your vehicle back on the road after it has been damaged. Some companies also retain the option of totaling the car out and paying a lump sum for you to purchase a new vehicle. It is always best to choose a level of collision that will cover the cost of your loan without falling short.

Understanding Comprehensive Coverage

Comprehensive insurance is a lot like collision coverage, but there are a few subtle differences. First, comprehensive does not cover the vehicle when it is being driven like collision does. Instead, comprehensive coverage starts when the engine stops. This type of insurance will help pay for damages and the loss of the vehicle due to circumstances that are out of your control entirely. Such events can include things like natural disasters and any crimes that might bring harm to your vehicle. Lenders require this coverage, much like collision, to ensure that their investment is protected.

Understanding Liability Coverage

Liability coverage is a little bit different than the other two forms of insurance. Instead of covering your own vehicle, liability insurance is there solely to take care of costs associated with other people’s vehicles and things. There are various types of liability insurance, including personal injury liability and personal property liability. Regardless of the types, this kind of insurance is usually required by law in your state. While each state sets its own minimums, liability of some kind is almost always required if you want to drive.

Understanding Limits

Limits are an aspect of auto insurance that can be rather confusing. In order to understand the limits, you have to look at how much an insurance policy will pay out. Quite basically, if you choose lower limits, then the insurance company will only pay up to that amount for each aspect of your policy. Usually, the state minimums is the lowest limit you can get on liability, with comprehensive and collision being considered extra add on coverage. The limits you choose will determine the premium that you will have to pay to keep yourself insured, and they will determine what you will be covered for should you get into an accident. For getting free auto insurance quotes, you should visit various sites on the internet. You will find your desired quotes through browsing internet extensively.

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