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Understanding Car Insurance

Car insurance is a legal necessity in 47 states.  In some states, a person of substantial means can skip car insurance and just provide proof that they are able to self-insure their vehicles; in other words, they provide proof that they have enough money to pay for a wreck.  Auto insurance has state minimum liabilities that differ from state to state.  Full coverage is required on vehicles that are leased or have a finance company.

Insurance Coverage

Minimum liability car insurance coverage is necessary because it pays for the damage to the other person’s vehicle or property if you are found at fault.  Property can include many things.  This coverage can also help pay defense costs should you be sued because of a wreck.  States determine their own minimum liability.  It’s a good idea to buy more than the minimum limit, if you can afford it.

Full coverage car insurance includes many different features.  In addition to the liability limits to cover the cost of replacing or repairing the car or property of others, it covers more possibilities.  Insurance companies offer uninsured/underinsured riders for their car insurance.  With this added to your car insurance policy, you are covered if someone hits your vehicle and either doesn’t have enough of their own insurance policy to cover the damage, or isn’t insured.  It is usually sold at the same rate of coverage as the liability portion.  Medical can be added to the car insurance policy.  This is not health insurance. This covers medical expenses for you or any passenger in the car during a wreck up to a certain amount.  This is important coverage, particularly if you are at fault in the wreck and someone in your vehicle is injured.  Some policies offer glass coverage, roadside assistance, and towing for very nominal fees.

Collision damage and non-collision damage, more commonly known as comprehensive, coverage comes with full coverage car insurance.  Collision is when your vehicle collides with another vehicle or another object.  Non-collision can include things such as storm damage, vandalism, theft, and other forms of damage.

When a claim is made on a full coverage policy, a deductible is charged.  Insurance companies offer a wide variety of deductibles for car owners.  The most standard deductible is $500.00.  This means that if you are in a wreck, you may be responsible for up to $500.00 of out of pocket costs.  Many insurance companies offer policies with no deductible, but they are more expensive.  Several companies currently offer safe driver bonuses that allow their customers to take $100.00 off of their car insurance deductible each year they do not have a wreck.

Are You Covered?

It is important that you know what is and isn’t covered with your car insurance policy.  If you have questions, it is important to ask your insurance agent.  If you’ve been in a wreck, you should speak with an attorney to protect your rights.  Do not sign anything from your insurance company without first consulting with an attorney.  Attorneys are skilled negotiators and can help you get your claim settled with the insurance company.

Robin is a writer at Byrd Davis Furman & Alden, a law firm in Austin, Texas. She just bought her first car and wants to know what kind of car insurance she should purchase. 

Tim Esterdahl

Tim Esterdahl is the editor of IFCS blog. He is a married father of three and enjoys golf in his spare time.

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