Auto insurance companies cover you and your passengers in the event of an accident. But it is up to you to decide the level of cover you will get.
Will the damages to your property be covered by the company? Will all the passengers be covered or only your family? What if your daughter was driving your car?
What questions should you ask your auto insurance company when it comes to auto insurance? This article helps you choose between the various insurance policies.
Types of auto insurance
Liability insurance, or third party insurance.
This is generally the lowest form of insurance offered by an auto insurance company. This is the basic insurance if you are involved in an accident, and it is proven to be your fault, the auto insurance company will pay damages to the other party.
The cover offered by the auto insurance company is usually set beforehand. These are the maximum amount the auto insurance company will pay in case of an accident
For example, the agent will agree on a $10000 coverage per person, (bodily injury) and/or $40000 coverage in bodily injury and/or $10000 in property damage per accident
You need to confirm with your auto insurance company what they will cover and what are the limits.
You might be offered a very low premium by some auto insurance company only to realize that your cover is minimal and unrealistic.
Collision and comprehensive coverage, comprehensive insurance, and full comprehensive insurance
An auto insurance company will also offer you a comprehensive insurance, as the name indicates, you will be comprehensively covered.
In simple terms, it means that if you are responsible for a collision the insurance company will pay for the repair of the vehicle.
But it is not so simple, an auto insurance company will almost always have the final say on what amount will be paid out, so if it is cheaper to give you the market value for the car, then they will.
You might think that your car is worth $1000.00 but the real market value might be $500.00. This is not an uncommon scenario. So if the repair of your car is more than $500.00 then the auto insurance company will simply pay the book value of the car.
You must make sure that the insurance company is not in control of the market value of the car, normally organizations like the AA will give an impartial market value.
As with the third party insurance, the auto insurance company will almost certainly limit the amount that will be paid out, but in general terms, a comprehensive insurance will have higher limits.
A recreation vehicle needs its own insurance, a Recreation vehicle insurance is not the same as auto insurance.
You should not assume that because your car is comprehensively insured, so is your recreation vehicle.
Other Types of auto insurance
Medical (MedPay), Persona Injury protection (PIP) and no fault cover
This insurance will cover you and your passenger’s medical expenses in the event of a collision.
The no-fault cover means that the auto insurance company will pay regardless of who is at fault. This gives you the peace of mind that, at the very least, your family and friends are covered.
PIP is often a minimum requirement in some countries or states, ask your auto insurance company what the requirements are.
Uninsured/Underinsured motorists’ coverage
This cover, (also sometimes a minimum requirement in some states), will cover you if the person at fault is not insured or is underinsured.
You must ask your auto insurance company what you will be charged in case of such a situation. Normally the auto insurance company should not charge you some extra premiums.
Rental reimbursement, towing and labor
Those ‘extras’ often given with a comprehensive insurance is often used by auto insurance companies as specials.
So in case your car is damaged the auto insurance company will pay for rental costs, (sometimes only for a few days).
The auto insurance company might also offer to pay for the towing of your vehicle, (not always included).
As always you should ask your auto insurance company what is included on the cover.
The legal requirements.
Most states and most countries will require a certain level of cover, from full comprehensive car insurance to third-party auto insurance.
In most cases it is up to you, the driver, to ensure that your auto insurance company offers you the minimum required. In most cases, the insurance company, (the auto insurance company), is under no obligation to instruct you of the requirements.
But of course, a good auto insurance company will, (should?), try its utmost to advise you on the best deal for you. That’s what we do here at JCA Insurance Planners. Don’t go it alone or in the dark. We’ll help. Contact us now!