Learn about Auto Insurance

The information and tips provdide at this post would help you learn about 'auto insurance', and all the related stuff. This all stuff is provided by 'The USAA Educational Foundation', which is non profit organization and offers the educational information for public awareness, so you can rely on the information.

You should always familiarize yourself with the products you are buying like auto insurance. By becoming an informed consumer and comparing insurance companies, you will get the best value for your insurance dollars.

You will manage your insurance premium dollars well if you self-insure as much of the risk as you can. A good rule is: Do not buy insurance for the losses you can afford. Use your limited premium dollars to buy insurance to protect yourself against the losses you cannot afford.

It is best to read your policy to understand it. Insurance coverage is very specific. Policies are legal contracts containing exceptions, exclusions and limitations.

What is Auto Insurance?

Auto insurance is a method of pooling the risks of many drivers, so no one individual has to bear the entire cost of an auto accident. Accident claims are paid from the combined premiums of all insureds in the pool.

Six Basic Coverages

1- When you buy an auto insurance policy, you are buying a package of individual coverages. Each coverage protects you against different types of losses. Once you understand the various coverages, you can decide which ones to include in your personal insurance package.

Bodily injury (BI) liability coverage pays, up to the coverage limits, for damages due to injury or death of others in an accident for which you or the operator of your vehicle are legally liable. In some, but not all states, this coverage applies to family members who are injured while occupying your vehicle. It also pays your legal defense costs. This coverage is required in all states.

Property damage (PD) liability coverage pays, up to the coverage limits, for another individual’s vehicle or property that has been damaged in an accident for which you or the operator of your vehicle is legally liable. This coverage is required in all states.

Medical payments coverage pays, up to the coverage limits, for reasonable and necessary physician, hospital and funeral expenses for you and your passengers injured or killed in an accident, regardless of who is legally liable. Payments are usually limited to expenses incurred within a specified period of time after the accident. This optional coverage is available in states without no-fault coverage. It may also be an excess coverage in those states that require no-fault.

No-fault coverage, sometimes referred to as personal injury protection (PIP), pays lost wages and certain other expenses in addition to the expenses covered by medical payments coverage. It is mandatory coverage in approximately half the states.

Uninsured motorist (UM) coverage pays, up to the coverage limits for injuries for you, your family and occupants of your vehicle caused by an uninsured motorist. In some states it pays for damages to your vehicle. It also covers pain and suffering.

Underinsured motorist (UIM) coverage pays, for bodily injury to you, your family and occupants of your vehicle resulting from the negligence of someone whose liability insurance limits are insufficient. The definition of an underinsured motorist varies from state to state.

Collision coverage pays, subject to a deductible, for damage to your vehicle caused by a collision or rollover. This coverage is usually required if you have a vehicle loan.

Comprehensive coverage pays, subject to a deductible, for damage to your vehicle from some cause other than collision such as theft, fire, vandalism, flooding, hail or collision with a bird or animal. This coverage is usually required if you have a vehicle loan.

Non-Owned Coverage

Most personal auto insurance policies provide all of the preceeding coverages, not only when you or someone else is operating your vehicle, but also when you or your family are operating a vehicle you do not own or regularly use, including a rental vehicle. Non-owned coverage is provided only if there is not insurance on the vehicle or the insurance is inadequate.

Optional Coverages

Here are additional coverages that you can consider.
Rental reimbursement pays, up to a specified amount for rental vehicle charges while your vehicle is being repaired for damage covered under your policy. If you prefer not to incur the cost of renting a vehicle yourself and cannot be without a vehicle while yours is being repaired, you might consider this coverage.

Towing and labor covers costs incurred for services rendered at the place of breakdown or for towing to a repair shop. For example, it covers the delivery of gas but not the cost of the gas. If you lock the keys in the vehicle or need a tire changed, this would also be covered. These services are often included in auto club memberships, which can result in unnecessary duplicate coverage.

Umbrella liability (a separate policy) provides an additional $1 million or more liability coverage beyond your other liability insurance. Because this is often secondary coverage — paying after you exhaust other coverage — umbrella insurance costs less than you might expect. This secondary liability coverage applies to your auto, homeowners, renters or boat liability coverage. The umbrella policy also provides primary liability coverage against claims such as libel and slander.

To learn and read more about 'Auto Insurance': The USAA Educational Foundation
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