Different Auto Insurance Coverage Types

As everyone knows auto insurance is a must have in most states. Buying auto insurance does not have to be a nerve wracking experience. Here are a few tips to help you find just the coverage you need.

First, decide whether you desire to carry full coverage or just liability. Full coverage will provide protection for your vehicle in the event you are in an accident where you are at fault.

Full coverage includes:

Liability and uninsured motorist...Liability is to pay for the other person if you hit someone and are at fault. Uninsured motorist is if someone who is not carrying insurance collides with you, and it is their fault (this is what pays for your vehicle).

Comprehensive...Comprehensive is your fire, theft, vandalism, and glass breakage coverage for your vehicle.

Collision...Collision is what pays for your vehicle in the event of a single car accident or accident where you are at fault and wish to have your car paid for or fixed. This is required if you still owe on the vehicle.

Liability and Uninsured Motorist includes:

Just liability coverage and uninsured motorist coverage (see explanation above). This means that in the event of a single vehicle accident you would not have coverage to repair or replace your vehicle.

Your policy should also include medical payments. This coverage will pay up to so much if you are taken to the hospital due to an auto accident.

Some policies even offer rental reimbursement and labor and towing coverage. Just remember that rental reimbursement is only in the event of an accident. It will not just pay for a rental car. Labor and towing is also in the event of an accident and does not usually cover things such as keys being locked in the car, running out of gas et cetera.

Deciding on what limits and deductibles to get should not be a hard decision either. The lower your liability limits and higher your deductibles the lower your premium will be.

What does "liability limits" mean? This means the limits that would be paid in the event of an accident. In the state of Tennessee, for example, 25,000/50,000 limits are the lowest that can be carried on a policy. This means that $25,000 would be paid per person but up to $50,000 per accident (this is to the other person if you collide with someone and are at fault).

Deductibles are what you will pay out of pocket before the insurance will take over. The majority of the time there is always a $250.00 deductible on uninsured motorist. In other words if someone hits you and are at fault and are not carrying insurance, you will pay the first $250.00 before the insurance will pay the rest on your vehicle.

Then there are the deductibles on comprehensive and collision. The majority of the time people go with a $0 deductible on comprehensive (this does not affect the premium much at all...usually only around $10.00 per six months). For collision a $500.00 deductible is usually the choice of most people (going from a $250.00 deductible to a $500.00 can actually save around $100.00 per six months on your premium).

Source: Person experience working in insurance