How Would You Select a Good Insurance Company
How Would You Select a Good Insurance Company?
Buying car insurance online is a necessity for most drivers, but the industry is constantly changing. What was once a simple process to purchase one type of auto coverage has become a maze of confusing policies, endorsements, and add-ons. With so many different types of auto policies available, it’s important to understand which coverages best suit your needs and financial situation.
The right auto insurance policy can protect you from considerable financial risk in the event of an accident or other covered circumstance. However, the wrong policy can be very expensive.
It’s up to you to decide which features are necessary for your situation and whether or not extended warranties, emergency road service, or other options are worth your money. Read on for more information about how home and auto insurance works and what factors you should consider when choosing the right policy for your needs.
Change Comes Fast In The Auto Insurance World
Auto insurance policies have evolved considerably over the years. In the 1930s, auto insurance was often a single, all-encompassing policy that covered damage to the insured vehicle, medical expenses, and even life insurance for passengers.
The state of Florida even mandated a “package policy” that covered all three types of coverage until the 1970s. While some of these “one-size-fits-all” policies remain available in limited areas, the vast majority of auto policies today consist of several types of coverage.
As you begin to research policies, you’ll notice that these coverages often have unique abbreviations and terminology. While some policies have remained relatively constant over time, others have been completely overhauled and rebranded since the last time you bought auto insurance.
Why You Need Auto Insurance
Before you can decide which types of coverage to purchase, you first need to understand why you need auto insurance in the first place. Insurance is a contract in which you agree to pay a certain amount of money to insurance companies in the event of a covered accident. The insurance company agrees to pay for any damages or injuries caused by the accident.
If you’re in an accident and don’t have auto insurance, you are responsible for paying for all damages, medical expenses, and any legal fees associated with the accident out of pocket. If you cause an accident with no insurance, you could be sued by the other driver and face serious financial consequences.
Auto insurance protects you from these expenses by transferring the financial risk of a car accident to your insurance company. If you cause an accident, your insurance company is obligated to pay for all expenses associated with the accident. Although every state requires drivers to maintain auto insurance, you may not need the full amount of coverage required by your state.
Depending on your financial situation, driving record, the value of your vehicle, and other factors, you may want to consider purchasing a lower amount of coverage or even going without coverage at all.
Deciding Between Liability Only, UM, And UIM Coverage
liability coverage protects you from most types of civil lawsuits, including those involving bodily injury and property damage. You can choose how much liability coverage to purchase and minimum amounts will vary by state, but you should purchase at least enough coverage to meet the state’s minimum requirement.
Most states also require drivers to purchase UM (underinsured motorist) coverage with their liability policy. This type of coverage protects you if the driver who injures you has inadequate insurance to pay for your damages. UM, coverage is normally included with your liability policy and most insurers will allow you to select the minimum amount.
UIM (uninsured motorist) coverage, on the other hand, is a separate coverage that can be purchased on any liability policy. UIM coverage normally protects you if the driver who injures you has no insurance at all.
Though UIM coverage is required by law in some states, it’s best to evaluate your financial situation and determine if it’s necessary for you. Remember, the cost of UM and UIM coverage is incorporated into your rate, so the more coverage you purchase, the more expensive your policy will be.
Deciding Between Deductible Options
A deductible is the amount of money you agree to pay out of pocket before your insurance company begins paying for damages. The deductible is one of the most important factors to consider when purchasing an auto policy, but it’s also one of the most overlooked.
Most drivers are best off purchasing a low deductible. If you purchase a low deductible, you’ll pay more out of pocket if you get into an accident, but you’ll also receive a larger monthly premium.
A low deductible is ideal if you have the financial means to pay it out of pocket. A high deductible, on the other hand, can be a great way to lower your premium and save money on your policy in the long run. If you aren’t able to pay a large deductible out of pocket and still maintain a budget, you may want to consider a lower deductible.
Staged Collision Benefits And Actual Cash Value
Staged collision benefits and actual cash value are two types of coverage that are often added to auto policies. Staged collision benefits are designed to help you repair your vehicle if you are responsible for an accident.
Staged collision benefits are normally only a few thousand dollars, but some policies will provide a percentage of the repair costs. If you purchase a policy with staged collision benefits and cause an accident, the benefit will be deducted from the overall repair costs.
A similar coverage called actual cash value protects you if you are hit in a hit-and-run accident and your car suffers extensive damage. Actual cash value policies pay you the current market value of your car minus your deductible.
So Which Auto Coverage Should
Auto insurance isn’t one-size-fits-all, but it can be difficult to find the right policy for your specific situation. Start by figuring out which coverages are the most important to you and what level of coverage you are comfortable paying each month.
Once you’ve identified your needs, you can start looking at different policies to find the best fit. Once you’ve settled on a handful of policies that meet your needs, you can start comparing coverage and pricing.
Remember, auto insurance policies are complicated and it can be challenging to find the right policy for your situation. It’s important to take the time to understand your options and how each policy will impact your financial situation.
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