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UNDERSTANDING AUTO-INSURANCE

Having insurance coverage on your assets is great for ensuring maximum protection to safeguard such properties against theft, accidents or any other unforeseen damages that may occur. With dozens of insurance service providers like for example https://rodneydyoung.net, different insurance policies and coverage, some individuals may find the entire process rather confusing and overwhelming as regards the paperwork or policy terms hence, they sign up for a policy that does not fully guarantee them with enough coverage or provide substantial financial aid when the need arises.

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A simple technique most people have reported as effective in understanding and knowing what insurance coverages and policies to sign up for, is by asking: “to whom will the insurance benefits be paid to?” Or “who bears full responsibilities for financial compensation”? Having these two vital pieces at hand is a great way for you to understand and navigate the many no down payment car insurance companies available and decide on which would work best for you in line with your finances and income.

This article contains some basic vital information on different insurance coverage, the benefits of having an insurance policy and other important elements required in helping you to navigate and fully understand the world of insurance.

TYPES OF AUTO-INSURANCE COVERAGE

Individuals new to the world of insurance need to understand the different coverage available to enable them have an idea on that which is best suited to their earnings of finances. A highly recommended principle when opting for an insurance coverage is to ensure that it is always higher than your current income level because it provides for an adequate safety net when you find yourself in an unpleasant situation or if something undesirable such as an accident due to neglect or ignorance on your part happens.

For example, if you are involved in a lawsuit as an insured car owner and based on the claims for damages, your financial income will be compared to your insurance coverage. If your insurance coverage is higher than your income, your insurance provider will most likely be held to account for payment of financial reimbursements and not you the individual because your coverage is on a higher level than your income thus, bolstering your safety net and making it a smart move to adopt.

Being bolstered financially by your insurance coverage allows your insurance provider to take on a bulk of responsibilities for any financial settlements or damage claims based on the terms and conditions of the coverage agreed upon.

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A Simple Guide When Picking an Auto-Insurance Coverage is to Consider:

  • Your current income level: that is your cash in-flow, current savings, investments, etc.
  • Your valuable assets and possessions: such as a vehicle, home, etc.

We have generalized the various insurance coverage listed in this article as their terms and policies may vary from one state to another.

Insurance Coverage is Broadly Categorized Into:

* Personal Coverage: that pays you as the vehicle owner.

* Liability Coverage: that pays others for damages you are legally responsible for as a result of an accident.

Types of Liability Coverage: this coverage help’s you in providing some bit of financial compensation depending on its coverage, to other person’s involved in damage caused by an accident you the policy owner is held responsible for, these include:

  • Bodily Injury liability coverage or BI limits:

Bodily Injury liability coverage is required by law in most States and the coverage also varies from state to state. This coverage state minimum is frequently opted in by first-time car owners with an average income or individuals new to driving. The Bodily Injury liability coverage may help pay for medical expenses, legal fees or lost income compensation to a driver or individual affected by an accident you cause. This coverage does not pay for your own medical bills in an accident caused by ignorance or negligence on your part.

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Most drivers frequently request for state minimums regarding this coverage and some states have lower state minimums such as the 10/20 which provide financial compensation of only $10,000 per occupant or person affected in an accident, up to $20,000 financial compensation to the entire occupants.

For example, if you hit a car with three occupants and each of them have $5,000 worth of medical claims, you are covered by the 10/20 insurance because it provides for $20,000 worth of financial payments on damages and the total medical claims of the three people involved in the accident amounts to $15,000, meaning you did not max out your coverage limit of $10,000 per person among the three occupants.

The 10/20 state minimum also has its limits which may be determined by the individual medical claims of each occupant affected in the accident. For example, if there are three occupants in a car and one occupant affected by an accident you caused has a $15,000 medical claim and the remaining two occupants have $5,000 medical claim’s each, you automatically max out the $10,000 range for which the states minimum 10/20 provides per person. 

The coverage would still provide financial settlements to the remaining two individuals who both have $5,000 medical claims each because their total claims did not max out the $20,000 coverage limit it entitles you too. In this scenario, the other occupant with the $15,000 medical claim can either sue you or your insurance provider to court for the remaining $5,000 which does not fall under the ambiance of the state minimum’s $10,000 limit for providing financial settlement to a single affected person.

As far as coverage is concerned state minimums can be scary and fragile therefore the need for caution to be exercised by individuals who opt-in for the state minimum’s coverage due to their income which may not be substantial enough to support a different insurance coverage with broader limits. Typically, what most low incoming earning car owners will do is to opt-in for the 25/50 coverage offered by some states as it provides substantial liability coverage higher than the 10/20 especially when you do not own any valuable assets or a high income.

  • Property Damage:
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Property damage also referred to as PD, covers payment for any damage you the policy owner are responsible and held liable for, such as running into any valuable assets or structures. Most states allow you the insurer to sign up for a $10,000 property damage that will assist you in providing financial compensations by repairing, replacing or paying for damages to anyone you hit.

Although, the $10,000 payout is low to cover for damages, let’s say a vehicle with high value resulting in repair costs that may be worth more than the $10,000 financial compensation offered by your insurer, therefore, leading to potential lawsuits. To avoid such unpleasant situations, it is always a good option to request and sign up for higher property damage coverage such as the $15,000, $20,000, $25,000 coverages as it bolsters you with an adequate safety net.

Property damage is one of the cheapest and secure auto insurances to purchase. Buying a higher package at the onset is a smart choice as it allows you to enjoy more value out of your insurance because upgrading a PD coverage, later on, can cost you quite a lot.

Types of Personal Coverage: this type of coverage benefits and compensates you the insure or policyholder for damages caused by either party.

  • Uninsured motorist bodily injury or uninsured motorist property damage:

This insurance coverage provides you the policy owner or insure with protection and financial compensation when in an accident caused by another party but only comes into effect when the person who hits you does not have insurance, is underinsured or when you’re involved in a hit-and-run situation. Some states combine the UMBI or UMBD insurance coverage in a single package thus making it compulsory to sign up for both coverages at once, while other states do not.

  • Medical payments:
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Medical payments insurance coverage provides aid in any situation regardless of who caused the accident and also does not take into account whether the other party who hits you have insurance or not.

  • Personal Injury Protection (PIP):

Depending on the state you live in, the law may require you to have mandatory PIP coverage that provides you with about 80% of coverage on medical bills or other costs relating to damages or accidents it caters for.

* Full Coverage: comprising comprehensive and collision insurance coverage.

  • Comprehensive Coverage: provides financial compensation for damages due to various elements, weather, vandalism or accidents not due to collision with another vehicle. This coverage comes with a non-deductible package which requires you to pay more over time.
  • Collision Coverage: provides financial compensation regardless of who or what caused the accident. This coverage comes with a deductible your insurance provider expects you to foot out of pocket or by the insurance provider of the other individual who caused the accident depending on if they have an insurance policy as at the time of the accident.

Other types of auto insurance coverage include:

Gap insurance: provides coverage depending on the car’s value over time for car loans following theft, loss or substantial damage.

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Towing and rental insurance: may come along with comprehensive insurance and provides coverage for tow fees a repair cost.

Classic Car insurance: provides coverage for vintage and classic car owners.

Rental reimbursement insurance: pays for car rentals when your vehicle cannot be used due to an accident.

BENEFITS OF AUTO-INSURANCE

Owning a vehicle is a major responsibility and this ownership requires you take adequate steps in having a backup plan or financial buffer to help you with financial aid with claims resulting from unpleasant scenarios such as injury, harm, vandalism, theft damages, or lawsuits that may arise when using your vehicle.

When you sign up for auto-insurance at moderate fee known as your premium, you are in essence transferring your financial risk to your insurance provider who now bears some bit of responsibility depending on your insurance coverage, to aid you with financial claims or settlements arising from accidents or damages during vehicular use.