Understanding Auto Insurance

Most states require Auto Insurance, and the few that don’t require financial responsibility, so it’s a good idea to insure your car, van, or pickup even if it’s not required.

The key to understanding auto insurance is in these 6 basic types of coverage that make up a policy:

Bodily Injury Liability covers the injuries that you or someone driving your vehicle causes to someone else.
Personal Injury Protection (PIP) or Medical Payments pays for the treatment of injuries to the driver and passengers of your car.
Property Damage Liability pays for damage you or your car may cause to someone else’s property (usually another car, but also signs, fences, etc.).
Collision covers repairs to your car for damage caused by an accident.
Comprehensive covers theft or damage by something other than an accident.
Uninsured and Underinsured Motorist Coverage covers your car and it’s drivers and passengers if you’re hit by an uninsured, underinsured, or hit and run driver.

Auto insurance can be expensive and understanding auto insurance can help find the right coverage, protection, and price combination. Ignore the big advertising budgets as you shop. Those that shout “low prices” the loudest are often the most expensive. I suppose that we can thank them for sponsoring and financing some of our favorite shows, but I’d be happier if they just gave me a discount for the amount that they spend on ads.

Understanding Auto Insurance is easier than many other types of insurance as the coverage is consistent. Arm yourself with an understanding of the 6 basic types of coverage above and you can easily compare the basis each companies offerings. You will also need to decide if you are comfortable dealing completely online or if you prefer the assistance of an agent. Beyond the basics, some companies offer perks or add-ons. Some offer basic roadside assistance, good driver benefits, or discounts.