While most people understand that they are going to need auto insurance in order to legally operate a motor vehicle, it is not always easy to grasp exactly what kind of insurance one should invest in and why. Many different levels of auto insurance provide differing levels of coverage. With so many options, how can any driver choose auto coverage with confidence?
Finding the right amount of auto insurance coverage is a balance between protecting an affected vehicle against potential sources of damage (and the policyholder from any injuries that may result from an accident) and the price of the policy.
People who are on a budget may feel tempted to purchase liability only insurance coverage for their vehicle. This is the lowest level of auto insurance that will allow the driver to navigate the roads legally. If the driver is involved in an auto accident that is found to be their fault, a liability only insurance policy will pay to fix the vehicle of the other person but not the vehicle of the policyholder. This places the driver at a tremendous amount of risk. Furthermore, from the legal perspective, a liability only insurance policy also has a cap on the amount of money they will pay for the other person’s medical expenses. This could open up the policyholder to further legal action if the accident result in personal injury.
This is the basic insurance policy that most people will invest in. This policy will cover all vehicles involved in an accident if the accident is found to be the fault of the policyholder. For example, if the policyholder rear-ends another vehicle and the policyholder is found to be at fault, this policy will typically pay to fix both vehicles; however, there are additional riders that the policyholder may want to invest in. Collision coverage may or may not cover theft of the vehicle. If the vehicle is broken into and items are stolen, the policy may not pay to replace these objects. People should always read their policy carefully to see what is covered and what isn’t.
This is the highest level of insurance that most insurance companies will offer. Also commonly called an “Act of God” insurance policy, this policy will pay to repair or replace the vehicle up to the limit of the policy regardless of the type of damage the vehicle suffered. Common among storm chasers, whether the car is swept away in a flood or picked up by a tornado, the policy should cover these damages. Furthermore, these policies typically have a tremendous amount of coverage to pay for personal injuries that may result from severe accidents.
There are many different insurance polices available among these different levels and people need to find the policy that is right for them. Anyone who is having trouble having a claim paid out should consider contacting an experienced legal adviser for guidance.