When shopping for car insurance, one of the keys to ensuring that you choose the right policy for your needs is making sure you understand some key concepts.
Not sure where to begin? Below is a list of some common car insurance-related questions.
It's easy to remember what collision coverage does, simply by looking at the word "collision." When you have this type of coverage, you're essentially insuring your car against damages it may suffer if your car collides with another vehicle. Comprehensive coverage, on the other hand, deals with loss or damage caused by things other than a collision—such as theft, vandalism, animals or hail.
A deductible is a specific amount of money you pay out of pocket before your insurance company will begin to pay for a covered loss up to the limit. For example, if you have a $500 deductible and your car suffers $2,000 worth of damage, your insurance will pay $1,500 after you pay your $500 share. You can choose your deductible amount. This means that if your car experienced the same $2,000 damage and your deductible was set higher than $2,000, you'd pay the full amount out of pocket.
The reason many people opt for higher-deductible insurance policies is to lower premiums. While that is always helpful, consider what works best for your situation.
A limit is the maximum amount of money your insurance company will pay toward a covered loss. For example, let's say you cause an auto accident resulting in an injury to a person in another car, the case goes to trial and there's a verdict to compensate that person for $57,000. If the bodily injury liability limit on your policy is $50,000, your insurance company would pay $50,000, and then you would be responsible for the difference.
This question has an easy answer: Yes. Regardless of how often or how infrequently you drive, any time you slide behind the wheel of a car, your vehicle's insurance coverage has to meet minimum state requirements.
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