A Review of The Coverages on An Auto Insurance Policy

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Any vehicle that is driven on the road needs to be insured in almost every state in the United States. Even in the states where it’s not required, such as New Hampshire, you are still, of course, financially responsible for any damage you cause other people with your vehicle. Even in that state you still have to prove that you have the financial resources to cover these damages. 

Liability coverage is the main portion of an auto insurance policy, covering both the bodily injury and property damage you may negligently cause while driving your vehicle. The Wikipedia page on vehicle insurance shares that this is the part of the policy that almost every state requires. Beyond that, there are some states that require other coverages while they can be waived in other states. 

Uninsured and/or underinsured motorist coverage may be required in some states while most allow you to waive this coverage. This provides coverage in the even someone without auto insurance, or has low limits of liability that are exceeded, hits you. Another coverage that might be required or can be waived in personal injury protection or PIP. This is coverage, usually with a limit of $10,000, that pays for medical coverage for you and your passengers in an accident regardless of who is at fault. 

People who have a loan on their car are required by the lender to have comprehensive and collision coverage. Collision covers your vehicle, with a deductible, if you negligently hit something and cause damage to your car. Comprehensive coverage covers other types of incidents, also with a deductible, such as your car being stolen, keyed, having a tree fall on it, or other types of damage. 

There are additional coverages on auto insurance policies that can be purchased. These coverages are available in every state such as auto insurance Thornton CO. One of these is towing and roadside assistance. This covers having your car towed a reasonable distance or the labor cost of having someone come out and replace a tire or other similar services. There is also gap coverage which covers the cost between what your car is worth and how much you owe if your newer vehicle has a covered claim and is totaled. 

One thing to consider, as this article talks about, is when to drop comprehensive and collision coverage. If your car is paid off and is an older model it often makes sense to drop these two coverages. It doesn’t make a lot of financial sense, for example, to pay $600 a year for comprehensive and collision coverages on a car that’s only worth $3,000. 

A term people use is “full coverage insurance” although that really doesn’t exist. Everyone has a different definition of what this is. Some people consider it to be just liability, comprehensive, and collision. Others add in uninsured motorist and personal injury protection as well. It’s for this reason that it’s important to define what coverages you’re looking to drop when talking with an insurance company agent or representative when you decide to reduce coverages on your older vehicle.


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