Types of Car Insurance Policies

Article by Frank Smith

It is a statutory requirement for everybody who owns a car to have an insurance cover for it. Auto insurance is the most recommended form of car insurance policy in the United States. Before making an auto insurance shopping decision, it is recommended that an individual understand fully the components involved in the coverage. They are the comprehensive, liaison and liability. Each component accounts for a distinct ratio of the total premium paid.

Mostly, the comprehensive and the collision parts of the policy account for 40% or even more of the total amount of premium paid. The policy might also include a medical cover for both you and passengers on board. It may also include uninsured motorists incase you are hit by an uninsured person.

Comprehensive: this type car insurance of coverage takes care of repairs/replacement incase the car is stolen, hit by a natural disaster or have been destroyed by fire. Incase of theft, the insurer takes into consideration many other factors like the place of incidence, the time of incidence and circumstances surrounding the scene.

Liability: as the term states, this form of car insurance coverage protects the policy holder if only the policy holder is at fault for an accident. The cover not only takes care of the car but also medical expenses if bodily harm is experienced. It also covers for wage losses incurred during time of injury and also pain and suffering to the injured.

Collision: this car insurance cover does not take into consideration whether you are at fault or not. The aim of this cover is to retain the market value of the car after you have collided with or are hit by another car.

Car insurance consultants recommend that the best way to cut premium is by increasing the deductibles on the collision and the comprehensive covers. If the car is more than five years old, insurance consultants recommend that it is wise to scrub out these covers because the car isn’t worth that much. The rule of thumb states that it is of no use to keep on paying premium for a car whose retail value is less than 10% the collision and comprehensive premiums.

.