Auto Insurance 101
Auto insurance, as the term suggests, is insurance that you canpurchase for your vehicle (cars, trucks, SUVs, motorcycles,etc.). It provides protection against losses incurred as aresult of vehicle accidents. While the product seems simple,there are many different types of auto insurance policiesavailable for purchase. Depending on the policy that you choose,your coverage levels and types will vary. Broadly speaking,these are the types of auto insurance programs on the markettoday:Coverage:* 'Comprehensive coverage' (Comp) - This kind of insuranceinsures your vehicle against the cost of purchasing a newvehicle if it is stolen or destroyed in a fire. * 'Collision coverage' (Coll) - This kind of insurance insuresyour vehicle against the cost of repairing the vehicle followingan accident or the cost of purchasing a new vehicle if it isdamaged in an accident beyond economic repair.Protection:* Personal Injury Protection (PIP) - This insures against thecost of medical expenses and lost wages related to the use,ownership or maintenance of a motor vehicle. This insurance ismandatory in some U.S. states. * Medical Payments (MP) - insures against the cost of medicalexpenses for bodily injury sustained in an accident beyond anyexpenses that may be covered by PIP. * Legal liability claims against the driver or owner of thevehicle following the vehicle causing damage or injury to athird party. While 'Liability insurance' covers only legal liability,'comprehensive insurance' covers PIP, MP, as well as legalliability. In the United States, liability insurance coversclaims against the policyholder and any other operator of theinsured's vehicle. If, however, any other operators live at thesame address, they must specifically be covered on the policy.For rented vehicles, most rental car companies offer insuranceto cover damage to the rental vehicle.While comprehensive insurance covers most aspects of damagewhich can affect the car itself or the driver, there is one riskassociated with buying a new car is not covered even bycomprehensive insurance - once the car is bought, there is asharp decline in its value. During this period (immediatelyafter a car is bought), in which the remaining car paymentsexceed the value of the vehicle and thus the compensation theinsurer will pay for a 'totaled' (destroyed, or written-off)vehicle, customers may consider purchasing 'GAP insurance'. GAPinsurance was established in the early 1980's to provideprotection to consumers based on buying and market trends.
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