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The Difference of Policies-Why You Need Them.

Updated on June 23, 2009

Introduction To: Car Insurance Policies.

Most of the time when you call to get a quote for car insurance policies, Most of everyone thinks that they don't need to have all the added bonuses that you can get by upgrading your policy. Some of the time the added bonus that you may get isn't something that you would typically need or want to have but in some cases it might actually be something that you might later on need or want to have.  With most policies these days there is a way for you to earn money back or to get your insurance lowered by keeping a safe driving record while your policy is in good standing during that 6 month long period of insurance. Also keep in mind that if you pay your policy off up front you will save an additional amount for having already paid it in full. As a bonus to having it all paid you will also have extra spending money during the month because it is one extra expense you don't have to pay that month. In the following paragraphs I will explain to you just what the difference is in policies and why each one of them would benefit you. Also keep in mind that in some area's of the country you may want to have that additional coverage if you live in a city that may have a higher crime rate then others.

Insurance Coverage #1: Liability Only

Liability insurance is every states MINIMUM that you must have in order to drive a vehicle on the road. With liability there is several types of liability. In this paragraph I will teach you about what each one is and how it is essential.

Property Damage Liability: With this liability it is the repair and replacement of someone else's vehicle even if it is found that you were the one to cause the accident. This one comes in handy if you are stopped at a right light and the car in front of you goes and a mile down the road slams on the brake's and you happen to rear end them because you didn't have enough time to stop before hitting their rear end of their vehicle.

Bodily Injury Liabilty: This is in case of, Worst case scenerio you are in a accident and the person in the other vehicle gets severely injured or may die, this will pay for the expenses occured during the process, Even if the accident happened to be your fault.

UnInsured Motoris Coverage: With this coverage it will help you if the driver of the other vehicle has no insurance coverage or has little to none car insurance. In this case lets say the driver has only the basic low cost insurance policy and will not pay for your vehicle to be repaired or replaced, In this case your insurance policy will pick it up and it may just cost you the expense of the first $500 or $1000 which ever your insurance policy says you must pay out of pocket first before their payment will kick in.

Bodily Injury Liability: Setting Limits

When selecting and setting limits on the cost of the payout for liability keep in mind a few things, If you select a limit that may be too low because you wish to save some money now you may be in the long run setting your self up for financial risk because of having to pay more out of pocket later on down the road after all the insurance has kicked out has ran out.

If you are in a accident and cause damage to you or someone in the vehicle above and beyond the damage allowance you will be held reliable for the cost above and beyond what the insurance company will pay, In this case you may be forced to liquidate your assets, dip into your savings, or future earnings that may be attached later on. When purchasing your liabiltiy keep these facts in mind and think about what your earnings and assets are now and what they can be later on while setting the limits on your policy. This will help to keep you out of the financial risk category later on down the road should anything happen.

Property Damage Liability: Setting Limits

As with the previous paragraph you will find that you will also need to set limits while setting up your car insurance policy, When setting limits keep in mind that you could have a accident where you can damage someones vehicle or you can have a accident where you damage their home or something else.

You may have a accident where you might run into the back of someones car and not damage the car a whole lot or you may run into their car and damage the whole back end and may need to be replaced or repaired above your limitations that you set in your policy. If this is the case you could be liable for the remaining balance on the repair bill and failure to pay could result in a law suit against you later on down the road. Or you may have had a accident where you ran into the fence of someone's lawn and will need to repair it. As this is the case you will have enough limits to repair the fence.

Insurance Coverage #2: Collison.

With this type of car insurance coverage, If there is a accident and you are found to be the cause or fault of the accident, This coverage will pay for your vehicle to be repaired. This insurance is good to have if you are what someone might call as a unsafe driver. If you think you may be in a accident or have something happen to your car that you will be at fault for this type of insurance may be the best option for you.

All types of Insurance vary depending on the case and circumstances behind you getting the insurance. If you finance your vehicle, Whomever financed your vehicle may have their own expectations of the types of insurance that you must keep on the vehicle at all times.

Insurance Coverage #3: Comprehensive.

With this type of insurance you may want to have this insurance policy type if you live in certain so called Disaster Area's of the country. This type of coverage will pay for something that happened to your car if a "Act Of God" or Third Party Act.

Lets say you park your vehicle and go inside the grocery store and come back to discover that the vehicle is not in fact where you left it, If this is the case the insurance will have you file a claim and submit it along with a police report. After so many days of the car not being returned to you, They will issue a check for you to replace the vehicle.

In the Act Of God theory, Lets say you live in Florida where so many months of the year it is considered to be Hurricane Season, You may want to have this coverage so In case you fail to get out of the course of the hurricane in time, With this scenerio it will pay for the damages caused by the hurricane to your vehicle. Or if you live in what is called or referred to as Tornado Alley you also may want to have this type of insurance on your automobile. If there is a tornado that hits your vehicle while you are hiding in the closet waiting for it to pass over you, and then come out of the closet to find that your vehicle is in the tree of the neighbor around the corner and will not be driveable after being pulled from the tree. It will pay for your vehicle to be repaired (however long it may be) or pay for you to have a replacement vehicle. In some instances you will have the option of whether or not you wish to just have them issue you what you would get instead of repairing the vehicle. Some cases it may be cheaper to just replace the vehicle and less time consuming to do this rather then waiting for your vehicle to be repaired.

Uninsured Damage Liability: Limits

With Uninsured Liability, If your vehicle is involved in a accident where the driver or the other vehicle has no insurance this will pay for your vehicle to be repaired or replaced, or will pay for damages to you and your passengers. It will also pay for any expenses from a hit and run. In this case the policy will cover, the policy holder, any drivers included in the policy, and any passengers. if the person of the opposite vehicle does not have insurance it will cover the expenses set forth in the policy and above and beyond you will be held responsable for.The maximum that will be paid will be paid per accident and per person.

Underinsured Bodily Injury Liability:

In the case of a accident and there is not enough insurance in either case scenerios this coverage will pay either your expenses or the other persons expenses if they didnt have enough insurance either. If this is the case it will cover what was not covered in their insurance policy and what wasnt included in yours if that is the case. Someone might benefit from this type of insurance if you do not have health insurance to pick up the tab from the accident. Lets say that you are involved in a car accident where your highest payout may only be $5000 per person or per accident and you end up going to the hospital with a concussion broken arm and broken leg, If your highest payout is only $5000 and you have health insurance it may be wise to use your health insurance and then turn those bills into your insurance company and let the two of them argue it out on who will pay for what. Above and beyond what the insurance company will pay.

Insurance Companies:

There are many insurance companies that you can choose from. I highly recommend the most common first to get a quote from such as State Farm, Geico, Direct,All State, and the list goes on and on. You should check with close friends and family and find out what each and everyone of them thinks of their own insurance companies so that you can compile a list of companies that you will want to check out first and the companies that you will not want to check into unless the other companies have to high of a deposit or are unwilling to give you insurance. There are many circumstances that will determine who you will ultimatley go with. Just keep all the facts in mind before deciding your final outcome.

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      Erick Smart 9 years ago

      That is one of the problems of purchasing insurance online. There is something to be said for the old fashion agent sitting down with you and discussing your policy and how accidents will be covered and affect you.


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