Auto Insurance - Premiums, Deductibles And Coverage

By Compuquotes Team on March 27th, 2008

Auto Insurance

There are many things that impact the cost of your auto insurance and when the underwriter or agent pulls them all together, you end up with a final type of insurance at a set price. Let's look at all the things that impact your insurance and the price that you will pay.

First off, �premium' (a word that's used frequently in insurance) is the amount of money that you will pay for your insurance. It is the ultimate cost, whether you pay all of the premium up front or in monthly payments.

The type of coverage that you have will depend on many factors, but primarily the type of car that you own. There are some minimums of auto insurance that you will have to meet by law, as well as from your lending institution if you have a loan or lease on your car. There are basic types of coverage that you can choose from:

Personal Liability/Property Damage (PL/PD): Throughout the United States and Canada this is the minimum insurance you must have in order to operate a motor vehicle on public roadways. Personal Liability and Property Damage is coverage for damage done to other people and their property when you are at fault in a collision. This form of insurance is what pays out if you are in an accident with someone else and you are at fault. Most people will carry $1 million liability - the standard rate, to cover collisions and negligence charges if they arise. This also includes coverage for fire, theft and damage to your vehicle for anything that is not a comprehensive or collision claim.

Comprehensive (Comp): This insurance does not cover any damage done to your vehicle that is sustained in a collision. Comprehensive insurance is sometimes referred to as �other than collision insurance�, which means that it pays out for most everything that isn't a collision.

Collision: This one is self explanatory - collision insurance pays to fix your vehicle if you are at fault in a collision. (If you are not at fault, the other driver's liability insurance will pay to fix your vehicle.) Collisions are any time your vehicle strikes another vehicle, building or person.

There is also some optional insurance coverage available as well, such as glass coverage that will replace your windshield. Your side windows and back window are covered under PL/PD.

A deductible is the amount of money that you will pay when you have a claim. There is a deductible for comprehensive, collision and glass coverage. You can choose the amount of your deductible, and the amount you choose will impact the cost of your insurance premiums. If you choose a low deductible so you will have less to pay out when you have a claim, your insurance premiums will be a little higher, whereas if you choose a high deductible, your insurance premiums will be lower.

Depending on the type of vehicle you drive, you may need full coverage. If you are leasing your vehicle or have a loan for it, you will need to have a specific level of insurance as dictated by your lender or leasing company. Check with them about your minimum insurance requirements. New vehicles need to have the most insurance (full boat), while an older vehicle that isn't worth what you would pay in premiums, usually only has PL/PD insurance.

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