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When you're shopping for auto insurance, it pays to get quotes from several insurance companies. Auto insurance rates can vary a great deal from one provider to the next. If you don't get quotes from a variety of companies, you can't be sure that you are getting the best deal on your auto insurance policy.
Find the Right Car Insurance Coverage for You
Some form of car insurance is legally required to drive in every US state except New Hampshire. Which specific types of car insurance coverage a consumer should choose depends on their budget, and the type of risks that they want to protect themselves from.
In addition to those individual factors, the state that a consumer lives in has a large impact on what type of coverage they can choose. There are two basic systems of car insurance in the US: the Tort system and the No-Fault system.
In states using the Tort system, law enforcement personnel typically investigate auto accidents and determine who was at fault. The insurance company of the motorist ruled to be at fault pays the other motorist(s) to compensate them for their damages. The majority of states use the Tort system.
No-Fault insurance began in the 1970's as a way to fight excessive litigation from auto accidents and speed up payment of claims. The idea was that everyone's own insurance company would take care of their medical costs resulting from an accident, regardless of fault.
No-Fault systems vary significantly from state to state. Many states describe what constitutes grounds for legal action, usually "life-changing" or "permanently disabling" injuries, though courts have interpreted labels like these to be broader than they sound. Other states have set a monetary cap for medical expenses that, once exceeded, is sufficient justification to file a lawsuit.
There are significant differences in how No-Fault insurance works from state to state. Consumers should visit the website of their state insurance department to fully understand the details of how No-Fault auto insurance works in their state.
Below is a synopsis of the basic types of liability coverage. Liability coverage only exists in Tort states since in No-Fault states, motorists will have their insurance claims paid by their own insurance companies.
Property Damage Liability: This type of liability coverage pays for damage to the property of others, up to a certain dollar amount specified in the policy. Your insurance company will pay for the damage whether you were driving your vehicle or whether someone else was driving your vehicle with your permission. Different states require different minimum dollar amounts of this type of coverage. These amounts can be quite low, however, and you may want to purchase coverage above the legal minimum.
Bodily Injury Liability: If you, or someone driving your vehicle with your consent, caused an accident in which people were injured, this coverage would protect you against their claims of lost wages, pain and suffering and medical expenses, again up to a dollar amount specified in the policy. Again, different states require different minimum dollar amounts of this type of coverage.
Uninsured Motorist Liability: Uninsured motorist protection covers your expenses if you're injured in an accident by a driver that doesn't have insurance or doesn't have enough insurance. Uninsured motorist coverage does not cover the driver of the other vehicle.
There are two basic types of auto insurance coverage that exist in No-Fault states:
Personal Injury Protection (PIP): This coverage pays a minimum dollar amount if you or anyone in your vehicle is injured in an accident. PIP typically covers items like medical expenses, lost wages, funeral expenses and survivor's loss benefits. PIP policies will have a specified dollar amount and/or time limit on payments for these benefits. PIP coverage is available in some Tort states as well, although it may overlap with your bodily injury liability coverage.
Residual Bodily Injury Liability: This type of coverage is designed primarily to protect drivers if they are involved in an accident that is severe enough to trigger a lawsuit. There are major differences between No-Fault states regarding what is required in order for a lawsuit to be filed. In most states, a severe or disabling injury, death, or damages or medical bills in excess of a particular dollar threshold are required for a lawsuit to be filed.
The other major types of coverage are collision and comprehensive coverage, which are each available in both Tort and No-Fault states.
Collision: Collision coverage will pay for repairs to your vehicle caused by a collision with an object other than a vehicle. If your vehicle is totaled, your insurance company writes you a check for the cash value of the vehicle. Collision coverage is not legally required but if you purchase a new vehicle with a loan, the institution financing the vehicle may require you to obtain collision coverage. If you have a vehicle with a very low Blue Book value, collision insurance is probably not worth obtaining. You will likely spend more on premiums than you would receive in a claim.
Comprehensive: Comprehensive coverage is for almost any other kind of damage that may befall your vehicle other than a collision. This includes theft (though only the value of your car, not your belongings inside the vehicle), vandalism, damage from flood, fire, severe weather, falling trees, and most other hazards. Comprehensive coverage is not legally required but like collision coverage, if you purchase a new vehicle with a loan, the institution financing the vehicle may require you to obtain comprehensive coverage.
Gap Insurance: A useful complement to collision or comprehensive coverage is gap insurance. When you drive a new vehicle off the lot, it immediately loses a sizable percentage of its value. If it then gets totaled in a crash, you owe the dealership for a new vehicle but the insurance company will pay you the "Blue Book" value for a used car. Gap insurance helps drivers avoid this problem by paying the difference between what a driver owes and what they are paid if the vehicle is totaled. If you lease a car, gap insurance is often required by the lender.
The expert insurance agents that we work with can help you sort through your many life insurance options to create a auto insurance policy with the perfect coverage for your needs.
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