How Car Insurance Works

Posts Tagged ‘Car Insurance Tips’

There probably has been or will be a time when a relative or one of your friends wants to borrow your car.  You wonder if your insurance or theirs would cover them in the case of an accident, and how it would work if they were covered by your insurance.  These are never silly questions, and getting some answers is a step in the right direction.  Here are some car insurance tips about what you should know before you loan your car to someone.

Before you say yes to the friend or relative that asks if they can drive your car, it’s important to think about what kind of driver they are.  If you know the person well, this will make things easier, and if you have been in a car with the person before and can’t remember anything appalling, the person will probably behave responsibly and take care of your vehicle.  On the other hand, if the person who asks drove like a maniac saying things like “look, no hands,” or just who just drove with careless disregard for speed limits and vehicle spacing, loaning them your car probably isn’t a good choice.  Similarly, if you aren’t certain what kind of driver the person is or what their record looks like, don’t let them drive your vehicle.

When you are certain that you trust the person to drive your car, go ahead and call your insurance agent or company.  Ask them if your insurance will cover another person driving your vehicle.  Most likely when you first bought the insurance policy, the agent asked you if you wanted another driver added to your plan, a member of your family, for example.  If you already have the person added under your coverage, great; if not, the agent can immediately assist you in doing so.

If you don’t see this as a longtime arrangement and do not want to add the person to your insurance you can just ask the agent if your plan would cover another driver not already on the policy.  For the most part, insurance remains with the vehicle, but policies differ so you should definitely check to see what your representative has to say.  Remember that your original contract between you and the insurance company was established with your driving record, so if you let someone borrow your vehicle often they must be added to the policy.  On the upside, you can be sure that the driver will be covered if there is an accident.  On the down side, if you add another driver to your policy, you may experience a rate increase that correlates to the new driver’s record.

So, “how does auto insurance work when you loan your car to someone?”  Usually the insurance remains with the vehicle, and you are responsible for anything that happens when another person is operating your vehicle.  Most likely your insurance policy will cover the driver, but not all of them do, so it is best to double check to be sure.  Think twice before you let just anyone drive your car, because any claim you have to file will raise your premium.  Hopefully these car  insurance tips will help you become more informed on what you are covered for.

As unemployment continues to rise, many people are getting rid of their auto insurance to save themselves a monthly payment.  In a study conducted by the IRC, or Insurance Research Council, the IRC assessed this result of the economic downturn and found that if trends continue, the number of uninsured motorists on a national level will rise from 13.8 percent in 2007 to 16.3 percent in 2010.  Operating a vehicle without any coverage, among such a large portion of uninsured motorists, is becoming even more hazardous.

If you, like so many others, don’t have a lot of money to go around, you might be considering whittling your insurance down to the lowest coverage your state will allow.  Unfortunately, the lowest coverage will probably not completely save you or your belongings if you have to file a claim.  It would be wise to have more than basic coverage if your car is worth anything, or if you have valuables you want to safeguard.

In the United States, there are laws in every state with the exception of New Hampshire and Wisconsin that you must have liability insurance on your vehicle.  The required policy is slightly different depending on the state in which you live.  Examples of varied liability limits refer to the different amounts insurance required by the state in terms of the following three categories: bodily injury liability for one person, bodily injury liability for all people hurt, and property damage liability for a single collision.  In Alabama, for instance, motorists must have at least twenty-five grand of bodily injury liability for one person, fifty grand bodily injury liability for all people involved and twenty-five grand worth of property damage liability.

Personal Injury Protection (PIP), or in other states Medical Payments (MedPay), will cover any hospital bills or wages you were unable to earn while without work as the result of an accident.  They also offer benefits when there is loss of life and recover all but twenty percent of the worth of your belongings.  This coverage is mandatory in fifteen states. There are also states with laws that render it necessary to have a car insurance policy that will pay for all of your hospital bills, and any pain and suffering losses that an accident incurs.  In still other states you may be required to have insurance for vehicle injury if the other driver caused the accident and doesn’t have insurance.

Since the economic downtrend has left more and more people without insurance, a policy that protects in the event of an accident with an uninsured motorist at fault is a good idea, even if your state doesn’t require it.  If you don’t have a lot of money for car insurance, it is still important to know what amount of insurance your state requires.  It will be necessary for you to decide on the healthy balance that will protect you and your family without forcing you out of house and home.

You are probably wondering,”how does car insurance work?” and what are the different types of car insurance that I should be looking for?  Well here are some basic car insurance tips and coverages that will enable you to better understand how car insurance works.  Use these car insurance tips to discover what you need in the type of car insurance you need.

How Basic Liability Car Insurance Works

Basic liability coverage is something, which is the minimum required by most states.  Basic Liability Only car insurance only covers damages made to others and their possessions.  The  coverage is approximately $50,000 for any, one person injured by your negligent driving, and $100,000 for everyone injured in the accident.

Generally it is advised to cover much more than the bare minimum required, as this is the most important coverage, and could expose you to risks of judgments and lots of legal costs.  Additional coverage, over the required minimum, will proportionately cost you less, because the rate at which the premium amount increases, is much less than the rate at which the coverage goes up.

Car Insurance Tips: Bodily injury liability should be thought of carefully as this cost can be much more than property damage in a serious accident. You can opt for a lower property damage coverage, but at least take $300,000 to $500,000 worth of personal injury liability.

How Uninsured Motorist Car Insurance Works

Another important type of coverage is the Uninsured Motorist Coverage.  This coverage will be of help when you are injured in an accident, and the other driver does not have any insurance, or has too little.

Car Insurance Tips: In such a case you will not be reimbursed of your medical expenses without this coverage.  It is advised to carry the same limit as your liability coverage.

How Personal Injury Protection Car Insurance Works

PIP or Personal Injury Protection sounds like the right kind of coverage for you and your family.  But in actuality it is not considered a wise choice, because it is limited and pays for a trip to the hospital, caused only by an automobile.  It is much better to have a good health insurance that will give you much better coverage, for treatment of any injuries caused in a car accident. If in your state, PIP is mandatory, then you can go in for the bare minimum.

How Collision Car Insurance Works

In regards to the vehicle, there is a collision coverage car insurance.  In this, the insurance company, will pay for the repairs or even replacement of the vehicle, in case of a collision. If you take a comprehensive coverage, then the company will have to pay for loss or damage to the vehicle, that is caused by any natural calamity, riots, theft, fire and so on.

How Deductibles in Car Insurance Works

In any car insurance policy, there will be deductibles.  This is an amount you have to pay before the insurance company gives out any amount of the comprehensive or collision insurance claim.  In the event of an accident you have to pay this deductible amount first, in order to get paid by the company.

Car Insurance Tips: Higher the deductible you are willing to pay, the lower will be your insurance premium.  So according to your need and requirement of risk coverage, you can set a deductible amount.

How Endorsements in Car Insurance Works

The remaining coverage is car insurance endorsements, which cover the cost of towing, accident-site labor and rental car expenses. The premium on these insurance policies are inexpensive, but you may not actually need it. I t is recommended to go in for an auto club like AAA for towing and labor.