Posted September 18, 2013 | Filed under topic Auto Insurance Buying Tips
Why Are You Purchasing Auto Insurance?
The main reason people purchase auto insurance is simply because it is required. There are minimal coverage requirements in state laws, but how much extra you decide to purchase is completely up to you. This content is a guide to the most common terms used when purchasing auto insurance.
BIPD or Bodily Injury/Property Damage
This is the first term that you will discuss when discussing the terms for a new auto insurance plan. This term refers to the amount of liability coverage you have. This is the type of coverage that covers you when the accident is your fault.
It is required by every state. Make sure you know your state’s minimal requirements on this type of coverage before purchasing auto insurance. Also, make sure you have as much of this as you can afford, as this will be what protects you
The reasons that make an event your fault may vary greatly from state to state, so it’s important to know your state’s laws about what makes an accident your fault when trying to decide how much BIPD insurance you should purchase.
This term refers to the amount of coverage you will have to your own vehicle in the case of an accident. The higher the number, the more coverage you will have.
This is important to be careful of. You do not want to take out too much collision coverage that will over-pay for your car. It is, however, important to have enough. If you lack this type of coverage, you will have to fork out a little of your own money to finish paying for your vehicle repair. This can be difficult to do at times in an economy like this.
This is usually the second term you will discuss when purchasing auto insurance. You can remember this by thinking about putting others first. First you cover others, then you cover yourself.
When trying to decide how much of this coverage to purchase, think about what your car would be worth when totaled. You definitely don’t want to pay for more coverage than what you could get if you totaled your car. This would be virtually useless, unless you don’t want to lose your car. However, look for a quick spike in prices as your amount of coverage goes up.
Comprehensive coverage is another major term that you need to look out for in purchasing auto insurance. It covers damages by acts other than those of a collision, or accident. Comprehensive coverage covers things such as acts of nature or acts of vandalism. You want to use your knowledge of the geological location, and even your specific neighborhood, to determine how much of this type of coverage you need. For example, if you live in Tornado Alley, you may want to purchase more comprehensive coverage to cover damages from storms. Likewise, if you live in a big city, you may be at a higher risk for vandalism than those that live on a large farmhouse, thus suggesting that you should purchase more comprehensive coverage.
Keep in mind that this is only a short list of terms you should look out for when purchasing auto insurance. Try to get as much auto insurance as your budget will allow, as this type of insurance comes in handy. Aside from health insurance, it is one of the most used insurances there are.