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| AUTO
INSURANCE: KNOWING THE BASICS BEFORE YOU BUY |
The
Basics
So
you're the new kid in town, looking to put a fresh
set of wheels on the road - or maybe just the same
old set in a brand new neighborhood. Either way,
state law requires that you insure your vehicle
before hitting the highway.
Choosing
automobile insurance is a lot like choosing the
car it covers - the task requires thoughtful analysis
based on price, individual need and personal taste.
A basic auto policy safeguards against property
damage, liability and medical costs by offering
an ala carte menu of separately priced coverage.
- Collision.
While not mandatory, this reimburses damage
to your car that results from an accident. Collision
generally comes with a deductible, as much as
$1,000, which you are required to pay up front.
If the accident was not your fault (and of course
it never is), your insurance company might reimburse
you for the deductible amount.
- Comprehensive.
Reimburses for loss due to theft or damage caused
by something other than an accident such as
fire, earthquakes, falling objects or getting
hit by very large animals such as deer, moose
or confused rhinos. This coverage, seldom mandatory,
usually comes with a small deductible - although
cracked or shattered windshields are often fully
compensated.
- Bodily
Injury.
Covers you, or a family member in case of injury
caused to a third party. Adequate liability
insurance is essential given the high cost of
going to court and, if you're found liable,
paying the ensuing damages. Most states require
liability insurance and the experts strongly
recommend buying more than the state required
minimum - as much as $100,000 per person and
$300,000 per accident. Check into umbrella policies
which expand coverage and increase compensation
limits.
- Medical
Payments or Personal Injury Protection (PIP).
Pays the hospital and doctor bills and lost
wages incurred by the driver, or passengers,
resulting from an accident.
- Property
Damage Liability.
Pays for the damage youÙve caused to someone
else's automobile or property. Does the same
if someone was driving your car without permission.
- Uninsured
and Underinsured Motorist.
Compensates you or a family member if involved
in an accident with an uninsured motorist or
a hit-and-run driver. Underinsured reimburses
you if the driver at fault has an amount of
insurance insufficient to compensate you for
a total loss.
Before
purchasing a car, whether it be new or used, you
should understand that sticker price, cost of repair
and incidence of theft all factor into your premium
amount. When seeking insurance, gather recommendations
from friends and neighbors, contact the state insurance
department about any company complaints and always
solicit at least three price quote comparisons.
Many insurers offer discounts if your car has features
that reduce risk of injury (such as air bags and
anti-lock brakes) or theft (anti-theft locks and
alarms). Low mileage, safe driver records and long
time customer discounts can save you money, as can
insuring with the same company that underwrites
your home. Finally, you might consider dropping
collision and comprehensive coverage on "Old
Betsy". Experts believe itÙs darn foolish to
insure a car worth less than ten times the amount
paid to cover it. |
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