What Types of Car Insurance Are There and What Do I Need?

By [http://ezinearticles.com/?expert=Steve_Faber]Steve Faber

Getting insurance for the first time can be confusing. There are so many questions to be answered, not the least of which is "What types of car insurance are there?" It is a valid question, especially for the young driver, who has only limited experience in automobile related matters.

There are many different types of insurance, but only a few common ones. Below are the major types of car insurance you'll find when looking for a policy. In most cases you and up getting more than one type, because they cover different things.

Liability Insurance -

In all but 2 states you'll be required to get insurance as a condition for driving a car. The fear is that you'll cause someone bodily harm or damage property and be unable to pay for the medical expenses or the cost of repairing or replacing their property. That is the basis for liability insurance.

If insurance is required in your state it will be liability insurance. If you cause an accident, your insurer will cover the damages. Typically, you must pay a portion of any claim paid out by your company. That is the deductible amount, which is normally between $100 and $1,000.

If for example, you're involved in an accident, you cause $5,000 damage to the other vehicle, and you have a $500 deductible, the insurance company will pay $4,500 toward the cost of repairing the other vehicle. You'll be responsible for the $500 deductible.

The higher deductible earns you lower rates form your company. Most kinds of insurance have a deductible associated with them. Liability policies have different limits for property damage and medical injury. Usually you'll see this on your policy statement as large numbers separated by slashes, such as Bodily Injury 50,000/100,000. This indicates your coverage limits for each person and the total limit for the policy. There will also be a property limit; normally between $25,000 and $100,000.

Collision Insurance -

What about the damage to your car that occurs in the above example? Damage to your vehicle would be covered under your collision insurance policy. This covers all damage over the deductible amount up to the policy limit, unless it was caused on purpose. i.e. you can't run your brand new SL-550 into a pole because money's tight and you need a quick $80,000. The company will investigate, then they will deny your claim and you'll be left with a sore neck and a wrecked Mercedes.

Comprehensive Insurance -

Comprehensive covers damage to the insured's (most likely you) vehicle caused by something other than collision, such as natural disaster, theft, or vandalism. When hail damages your car in the big storm in the spring, you'll file a claim against your comprehensive policy. Again, you'll first have to satisfy the deductible.

It is also smart to check the policy to make sure what is covered and what is not. Sometimes certain events or aftermarket add ons to your car may excluded under the terms of your policy. Go over this with your agent to be sure.

Uninsured Motorist -

Sometimes you'll be involved in an accident that is not your fault, and the person at fault has no insurance. In this case you can turn to your uninsured motorist policy to reimburse you for your damages. This is not to be confused with a close relative, under insured motorist insurance. Under insured motorist, as the name suggests makes up the difference between the fault party's coverage limit and the actual damage, should there be a difference.

Say for the case of argument, you are in your brand new Honda Accord EX, and get hit by a drunk in a '78 Suburban. If his property liability limit is only $15,000, you may be left holding the bag for the difference between the $15,00 his policy covers and the cost of your repair. That is where an under insured motorist policy steps in.

There are the main types of car insurance there are. When you shop for insurance, you'll want to carefully weigh the amount of coverage you need of each type, if any, then set out to get your best deal from a reputable company.

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Article Source: http://EzineArticles.com/?expert=Steve_Faber http://EzineArticles.com/?What-Types-of-Car-Insurance-Are-There-and-What-Do-I-Need?&id=2149884

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