Auto Insurance Coverage Choices
2006-05-29
Auto insurance is a way for automobile users to protect themselves financially for losses incurred as a result of car related accidents. Auto insurance can also be purchased for trucks, motorcycles and other vehicles. Auto insurance is sometimes referred to as car insurance or motor insurance. In some parts of the world, auto insurance is mandatory if you wish to drive on public roads. The reason for this is that auto insurance will not only protect the driver of the car, it will also protect third parties that suffer from loss, injuries or damage as a result of the driver's actions.
Before purchasing car insurance you should shop around and obtain several auto insurance quotes. When you receive auto insurance quotes, the auto insurance quotes will be based on a number of factors. Many auto insurance companies will provide you with free auto insurance quotes, while other may charge a smaller fee for their auto insurance quotes. One factor that will affect the auto insurance quote significantly is the coverage level. When discussing your auto insurance quote with a car insurance company it is important that you understand the terminology, since you might otherwise end up with a car insurance that is not suitable for you. You do not want to pay extra money for coverage that you are not interested in and changing the coverage can decrease the auto insurance quotes significantly. On the other hand, if you simply go for the cheapest auto insurance quote with out checking the coverage, you might experience an unpleasant surprise when you have been in an accident and need compensation. When you compare auto insurance quotes you should keep in mind that most car insurance coverage requires you to pay a deductible when you make a claim. Cheap auto insurance can have a very high deductible to compensate the issuing auto insurance company for the low price. When you receive different auto insurance quotes from auto insurance companies you should therefore always check how large the deductible will be. Sometimes it will be more economic to choose one of the more expensive auto insurance quotes. Some of the basic terms concerning coverage level that you should be familiar with before contacting an auto insurance company are these:
Collision coverage.
Collision coverage is abbreviated “Coll coverage”. Care insurance with Collision coverage protects you from financial loss caused by a collision. You can receive money for repair costs, or money for buying another auto if your car was damaged beyond economic repair.
Comprehensive coverage.
Comprehensive coverage is often referred to as “Comp coverage”. A comprehensive coverage will for instance cover the cost of purchasing a new car when a car is completely damaged due to a factor that is not covered by the Collision coverage. Examples of factors not covered by your Collision coverage are car theft and fires. Comprehensive coverage is sometimes required if you wish to be eligible for a new car loan. Some car insurance companies will offer you Comprehensive coverage that will insure you against several other types of car related accidents. Car insurance with Comprehensive coverage can for instance include Personal Injury Protection. If you choose Comprehensive coverage, your auto insurance quotes will most likely be significantly higher than auto insurance quotes for basic car insurance.
Personal Injury Protection.
This type of coverage is usually called “PIP coverage”. With PIP coverage, you will be insured against medical expenses related to the use, maintenance or ownership of a car. It is also common that insurance policies with PIP coverage also insure you against lost wages, e.g. during hospital treatment after a car accident. Personal Injury Protection is mandatory in several U.S. states.
Medical Payments.
Medical Payment coverage is abbreviated MP. Car insurance with Medical Payment will insure you against medical expenses that are not covered by your Personal Injury Protection (PIP). This extra coverage will naturally affect your auto insurance quotes.
Legal liability insurance.
Car insurance with Legal liability coverage will protect you against claims from a third party, e.g. when the car has caused injury or damage to another driver or pedestrian. The owner as well as the driver of a car can be insured. Even if this type of coverage affects your auto insurance quotes significantly, it can still be a very good idea to purchase Legal liability insurance since processing in court can be very expensive.
GAP insurance.
GAP insurance was created in the U.S. during the early 1980s. As mentioned above, comprehensive car insurance can provide you with money to buy another car after an accident. If you buy a new car, comprehensive car insurance might however not be enough. A completely new car always experiences a dramatic decline in value directly after someone has bought it, simply because it is not an unused car anymore. If you crash a two week old car, you will not receive the same amount of money as you purchased it for. As more and more people began to loan money in order to buy new cars, more and more people ended up owning the bank more money than they received from their insurance company after a car accident. The GAP car insurance was created in order to protect car owners from this “gap”. GAP car insurance can also be useful if you have leased your car. Most car owners obtain separate car insurance quotes for the GAP insurance.
Auto insurance quotes from a car insurance company will be affected by several other factors then the desired coverage. All car insurance companies make statistic risk estimations based on a multitude of factors in order to calculate the correct auto insurance quote. Your premium can therefore be affected by which car you drive, the usage of the car and your driving history. Other factors than can have an impact on your auto insurance quotes are age, sex and credit rating. Sex is usually only taken into consideration for youth rates; adult auto insurance quotes are unisex in most cases. You can also affect your auto insurance quote by requesting different deductibles, limit and covered perils.
When it comes to car usage, a majority of the car insurance companies charge a flat per-car/per-year price regardless of whether you use the car a lot or not. Your auto insurance quote will therefore not be based on how much you drive. Some car insurance companies will however offer a discount for customers with a low estimated future mileage. If you think that you will drive your car less than the limit stated by the car insurance company, you can be eligible for such a discount and should make sure that this information is known when the final auto insurance quote is calculated.
In 1998, a pilot program was started in Texas by Progressive Insurance. Volunteers had their cars equipped with GPS based technology that sent information about their driving to the car insurance company via cellular phone. Perhaps this is one of the future steps for car insurance companies in order to create even more accurate risk estimations to base auto insurance quotes on. The new GPS technology can also be used for “Pay as you drive” systems, where car insurance is purchased per mile instead of per year.
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