Searching Insurance
If you were to search the term insurance on your browser, a long list of promotional sites would come up that are trying to sell you coverage instead of informing you about the product.
For consumers who want to make informed purchases, learning about the car insurance buying process is a must before they apply for coverage. Unfortunately, many consumers shop for insurance when they are pressed for time.
It is a common assumption that it can take weeks or months to learn about insurance and to really familiarize yourself with requirements, policy terms, and details.
While this may be true in some circumstances, when you have all of the information that you need at your fingertips it can be quick and easy to gain knowledge. This consumer guide will present you with all of the accurate and straightforward information that you need while you are searching insurance.
Read this guide to auto insurance and get the answers to some of the most frequently asked questions posed by consumers buying car insurance.
Then, enter your zip code above for FREE car insurance rates from the top companies in your area!
How much insurance am I required to purchase?
If you were to search for the car insurance requirements in your state, you will see that you must carry at a certain level of protection that is required by law.
The laws will vary from state-to-state, but typically insurance laws and financial responsibility laws say that you must have at least liability coverage. Liability coverage is a form of financial protection that will cover your assets by paying for third-party damages sustained in a car crash when you are to blame.
If you do not fully understand what liability coverage pays for, read the simple definitions below:
– Bodily Injury Liability
Bodily Injury Liability (BI) will pay for the medical bills and lost wages of people who are injured in an accident who are not related to you, who were not in your car, and who do not live in your home.
If you or a permissive driver who is driving your car is involved in an accident and someone in another car is injured, your BI coverage will pay up to the limits that you have selected per person and per accident.
– Property Damage Liability
Property Damage Liability (PD) will pay when you damage someone else's car or someone else's real property. The limit per accident applies no matter how many vehicles or objects that you damage.
It does not pay to repair or replace your car when it is damaged because of your actions while you are driving, but there are supplemental physical damage coverage types that are available for this.
Liability is required in all states where auto insurance is required. In some states, officials are also setting requirements where you must carry protection against Uninsured Motorists and Medical Payments coverage to pay for immediate medical expenses.
You will need to visit your state's department of insurance consumer information page to find out how much coverage you must have so that you are prepared when you are searching insurance.
Why is it so important to buy adequate limits of liability insurance?
One of the biggest myths you might hear about car insurance is that you only need to buy the minimum amount of car insurance that is required by law.
While this does help you stay in compliance with the state and DMV laws, carrying the low limit requirements is not going to adequately protect you. You will need to buy more liability insurance than is required if you do not want to face a liability claim that will take money out of your pocket.
Understanding the Claim Process
To understand why carrying sufficient liability limits is so important you need to understand what happens when a liability claim is filed.
If you are involved in an accident and the other party files a claim against you, each insurer will work together to investigate the claims. They will determine fault and then correspond with one another until fault is agreed upon.
If you are found at-fault, your insurer will review the medical bills and estimates for damage and then decide if they are reasonable. They will make an offer, and the other party can decide whether or not to accept.
If the damages exceed your limits of liability, the insurer will only pay out up to the limits that you are carrying.
You will then be expected to pay the difference. If you cannot pay the difference, the victim has an option to file a civil lawsuit against you. In court, evidence will be presented against you and the judge will decide how much you must pay.
It is possible for your wages to be garnished and your assets liquidated if you owe a significant amount of money in some states.
How much liability coverage is enough?
To avoid the long and drawn out process of going through litigation and defending yourself against unfounded claims it is best to carry higher limits of liability.
You can never predict how much liability insurance is going to be enough, but you can make an educated decision as you sift through your options and price policy quotes.
There is not a single recommendation that is guaranteed to offer you a promise you will never see a lawsuit, but there are higher limits that agents will recommend for more peace of mind.
In most cases, reputable agents will always recommend that policyholders carry at least $100,000 per person and $300,000 per claim in Bodily Injury and $100,000 in Property Damage.
Considering that the costs of medical care and car repairs are going up, this is advisable for anyone who can manage the higher premium payments.
How can I ensure my car will get repaired when I am in an accident?
When you are in a not-at-fault accident, the other party who hits your car will be responsible to pay for repairs to your car so that you are in the same state that you were in when the accident happened. No matter how good of a driver you think you are, you cannot guarantee that you will never cause an accident.
If you cause an accident, you are not assured that your damages can be paid for unless you carry the right type of coverage.
There are two different types of physical damage coverage that will pay for repairs to your car or even to buy a similar car if it is so damaged it is not repairable. These coverages are called comprehensive and collision.
– Comprehensive
Pays for the repair or replacement of a covered vehicle on your policy that has been damaged or lost due to fire, theft, vandalism, explosion, falling objects and more.
When you file a comprehensive claim, the payout will not affect your rates because it is not a surchargeable claim. This is something many people do not understand when they try to avoid filing claims that will cause their policy rates to go up.
– Collision
Collision pays for the damages that are sustained when you are in an accident or when you collide with another object. Typically, it is your insurer who will pay for the damages when you are at-fault for an accident.
Having collision does come in handy when you are in an accident and fault is being investigated. When this happens, you can get your car repaired while the investigation is ongoing. If you do not have full coverage, you must wait until fault is determined for repairs or pay out-of-pocket.
Collision will also pay if someone who did not have insurance hit you and you have no other recourse.
When is physical damage required?
The state cannot mandate that you are required to carry physical damage coverage for your car. While the state does not have an interest, if your car is not paid off the title holder does.
All lenders and lessors are going to make you sign a contract that says you will carry damage cover. If you fail to maintain this coverage, the loss payee is notified and the company will force insurance that only protects them and also raises the principal on your loan.
It is better to buy the coverage that you need so that you are fully protected.
These are the answers to some of the most common questions that you might be asking. Now that you understand more about the process of buying insurance and filing a claim, you can really search for insurance and know what you are buying.
When you buy a financial product, you want to be sure it is really going to protect you.
Compare pricing by using an online rate comparison tool and then you can decide which limits you want and need. By searching insurance and really comparing the plans, you can make a responsible consumer purchasing decision.
Start now by entering your zip code below for FREE quotes from multiple companies!