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Explaining Car Insurance Coverages: What You Need to Know
When it comes to buying car insurance, it's important to have anidea of what you'd like to be included in your policy--otherwiseyou're more likely to be talked into purchasing more coveragethan you need. And increasing your auto insurance premiums isprobably something you'd like to avoid come renewal time.So take a look at the coverage details below and keep in mindthat an educated consumer is a powerful consumer!The BasicsNearly all states require you to carry auto insurance to protectyou and other motorists on the road. Included in your autoinsurance requirements are coverages in the forms of medicalcoverage or bodily injury and property damage.Medical liability coverage pays for any damages to othermotorists injured or in an accident for which you're at fault.This coverage can be used to pay for medical bills, lost wages,as well as any legal fees you might face.Property damage liability, as the name suggests, pays fordamage you cause to other vehicles, as well as public or privateproperty such as fences, buildings or road signs. But how much coverage should you have?Every state sets its own minimum coverage amounts. For example,in Arkansas, the state requires motorists to carry a minimum of$25,000 in bodily injury coverage per person, $50,000 in bodilyinjury coverage per accident and $25,000 for property damage.These limits are traditionally presented in the format:25/50/25. This is the format you will see as you comparecoverage amounts. And while minimum coverage limits vary from state to state, mostinsurers would strongly advice that you carry more than theminimum amounts, especially when it comes to liability forbodily injury. The Insurance Information Institute hasrecommended that motorists carry $100,000 for bodily injurycoverage per person and $300,000 in bodily injury coverage peraccident. Ultimately, the decision of how much liability coverage to carryis up to you. Be sure to ask your insurer how much your premiumwill go up by selecting higher coverage amounts--typically itwill only add a few dollars to your monthly bill!Other CoveragesIn addition to the coverages required by your state, there areother protections you can add to your policy to maximize yourprotection. The most common added coverages include collisioncoverage and comprehensive coverage. Collision coveragepays for damage to your car resulting from a collision withanother car or object. It can be added to your policy for anadded fee and typically carries a deductible. Adeductible is the amount that you pay out-of-pocket when filinga claim before the insurer assumes financial responsibility. If you financed the purchase of your car, it's possible thatyour lender will require you to carry collision coverage untilthe loan is paid off. Additional tip: If you see your premium inflate afteradding collision coverage, increase your deductible to see itfall. Just make sure you select an amount you can pay for if youhave to file a claim!Comprehensive coverage pays for damage to your carresulting from anything other than a collision. This couldinclude anything from theft and vandalism to weather-relateddamage from floods or tornadoes. Like collision coverage, if you financed the purchase of yourcar, your lender might require you to carry comprehensivecoverage. You will also need to select a deductible, which willis likely to increase your premium. Additional tip: After your car loan is paid off or thevalue of your car drops to under a couple thousand dollars, youcan drop collision and comprehensive coverage and see a heftydrop in your auto insurance rates.Special ServicesIn addition to beefing up your coverage, you can also addspecial services into your auto insurance policy. Many insurers now offer rental car coverage, whichprotects you from damages if you're in an accident while rentinga car. Towing services may also be added to your autoinsurance policy for an additional fee. If your car breaks downor you have an accident, the towing company affiliated with yourinsurance company may tow your vehicle free of charge.Windshield replacement coverage is another coverage whichhas grown in popularity in recent years. If your windshield iscracked or shattered, the coverage will pay for the windshieldto be fixed or replaced. Some insurers are now using windshieldreplacement as an incentive--the cost to repair a chippedwindshield is much less expensive than replacing the whole frontwindow.Additional tip: Check your benefits and coverages in yourcar warranty and auto club membership to avoid doubling yourcoverage on special services!Applying Lessons LearnedNow that you know the popular coverages included and added toauto insurance policies, you will have a better understanding ofwhat your insurer offers you, why he or she makes certainrecommendations and how to get the most out of your carinsurance policy. Use these tips in combination with carefulinsurance shopping to find cheap car insurance withgreat protections!About InsureMeInsureMe links agents nationwide with consumers shopping forinsurance. Specializing in health, life, home, long-term careand car insurance quotes,the InsureMe network provides thousands of agents with insurance leads
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