Probably the most complicated contract that most people will sign year after year, even if they’re unhappy with their provider, is their car insurance policy. While we can focus on safer driving, it’s still a need for auto insurance that we’re unable to get around. But what does it all mean and how can you read your next policy to ensure that you’re getting everything you need?
The Price of Comprehensive, Collision, and Liability Coverage
These terms are thrown around too often, where often, liability coverage gets paraded around as the cheapest option, and comprehensive as the “fancy” car insurance. It couldn’t be further from the truth. So here is what each type of coverage does.
- Liability coverage is the most expensive, and it’s the costliest for your insurance provider. If you do significant damage to someone else’s car, liability coverage is there. The insurance company is taking financial responsibility for tens of thousands of dollars in damage you caused. It hardly covers anything for your car.
- Collision coverage is what most people think that liability is, it covers the costs of repairs for both cars if you are at fault. Most of these policies are pricey because they come with a log of add-ons like roadside assistance, rental cars, and underinsured motorists.
- Comprehensive coverage is what most people think they can’t afford, but in all actuality, it’s the best deal. Comprehensive coverage might be the most expensive month-to-month, but if virtually anything happens to your car, you’re covered.
Understanding Why Price Fluctuates So Much Per Company
It’s frustrating when you’re getting quotes from car insurance companies, and they have maybe a range of a hundred dollars when it comes to the monthly payments. That’s not uncommon. Auto insurance rates fluctuate because each company calculates risk differently. Usually, a company will consider the following factors when giving you a quote:
- Years you’ve been driving
- Number of accidents
- Amount of tickets
- Age of the driver
- Credit history
- Yearly income
These factors count towards one big number that you’ll be paying to the company. Unfortunately for people shopping for a new policy, Geico, State Farm, Farmers Insurance, AAA and more all weight these aspects differently. Thankfully, you don’t have to call companies anymore or even speak with a service representative. Instead, you can get car insurance quotes online.
Optional Coverages
What is underinsured motorist coverage? What is uninsured motorist coverage and why aren’t they the same thing? Underinsured motorist covers those who are only using liability or collision policies that wouldn’t be able to cover substantial damages or medical damages. Uninsured motorist coverage includes those who are driving without insurance and cause an accident that leads to damages or injury. While it’s easy for people to think that they would take these issues to court, it’s unlikely that any driver would get a payout from someone who is avoiding paying for car insurance.
Personal injury protection is losing its grip in the insurance world, but there are still some states that can declare a “no-fault” accident. If you live in an area with “no-fault” accidents, you want PIP. It covers medical costs, rehabilitation if necessary and even funeral costs in the event of a death brought on by a car accident.
Article Submitted By Community Writer
