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Automobile Insurance – Types of Cover

Automobile Insurance is not made up of one thing, it would be much simpler if it were, but it’s actually made up of lots of different options and variations. Some of them are a legal requirement, others are optional extras. Let’s take a quick look, starting with the automobile insurance you must have to be a legal road user.

Auto Insurance Coverage Required

• Liability Coverage – you’ve got to have this, it’s the law. Okay, now that we’re under no illusion about that, what exactly does it mean? Well, if you cause an accident and thereby either injure somebody or cause damage to their property by driving your car in a negligent manner (that’s the best way of putting it I could think of) then this covers those costs. It might even stretch to paying for legal representation for you if somebody sues you. It’s usually split into two separate parts: Bodily Injury – which pays for anyone injured or killed as a result of the accident, this can be people in another car or pedestrians, passers by who just happened to be in the wrong place at the wrong time . . . Many states require you to have a minimum of $20,000 per accident per person, with a minimum of $40,000 total per accident. If you can afford more then you’re advised to take it, you never can tell what’s around the corner. Property Damage – is the portion of your car insurance which pays for damage to another persons property. It might be their car, it might be their shopfront window, it might be a garden wall, tree, sign, utility pole . . . States do differ but you’ll probably need to have at least $15,000 of property damage cover per accident. Again, if you can afford more cover, take it. Many cars these days are worth much more than $15,000, and medical bills can soon soar above the $20,000 minimum requirement.
• Uninsured Motorist Bodily Injury Cover – covers you in case you’re involved in an accident with a hit and run driver or a driver who is at fault but does not have auto liability insurance.  Again you’ll probably need a minimum of $20,000 per person and $40,000 per accident. More if possible.
• Under-insured Motorist Bodily Injury Cover – is similar to the above, but makes up the difference if the at fault driver involved in your accident is under insured.
• Physical Damage – is not always required, but it might be so if you don’t have it check out whether you should! Right, what does this do? Well, it pays for the damage sustained by your car. You might have to pay the first part of this yourself  (the deductible) which can range from zero up to $1,000 – that’s something you have to decide when you take out your car insurance policy. If you have an old car which wouldn’t really be worth the repair then you might decide that you’re better off saving money on this part of your car insurance. Again, physical damage is split into two bits – Collision coverage – which pays for any damage which is caused by crashing into either another vehicle or something fixed (tree / wall / utility pole etc). Comprehensive coverage – pays for any other type of damage from fire, vandalism, theft etc.

Automobile Insurance Optional Extras

There are a whole bunch of optional extras which you can choose to include in your car insurance policy:

• Accidental Death Benefit – if the insured person accidentally dies because of a car accident, this will pay out a pre-determined cash sum.
• Custom/Non Factory Equipment – will pay out for things which are custom or non factory! The sort of things which are in many van conversions, plus things you might fit to the car after it’s left the factory – CD players, cellular phones, CB radios . . .
• Medical Payments – is to cover any medical or (God forbid) funeral expenses for you and your passengers who are injured or killed in a car accident. It’s also cover for you and members of your family if you are injured while riding in another vehicle with someone else, or involved in an accident while walking or riding a bicycle etc.
• Gap Coverage for Financed or Leased Vehicles – is to cover the difference between the amount you owe on the vehicle, and the actual cash value of the vehicle which is the only amount that the insurance company will pay you if you don’t have this optional extra.
• Rental Reimbursement – will cover the costs of a rental car for you whilst your car is being repaired after an accident. It will cover a certain dollar amount per day.
• Towing coverage – will pay either all or a portion of the cost of towing your poor damaged car to the repair shop.
• Physical Damage / Replace / Repair Coverage – pays for a new car if it’s going to cost more to repair your damaged car than it would be to buy a new one. This is sometimes available only on models for the first three years.

So there you have it, lots of different types of automobile insurance cover designed to keep you safe and legal on the public highway. Some you definitely need, some might be worth paying the extra for, it’s all down to you and your individual circumstances. Either way, drive safely . . .