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Understanding auto insurance

November 9, 2009
When it comes to purchasing auto insurance, most of us try to get it over with as quickly and painlessly as possible. There is more to choosing auto insurance than simply seeing who will give you the lowest price. Taking the time to understand the basic types of insurance, the providers in your area, and your own insurance needs will go a long way to assure that you obtain the coverage that will serve you best through the years to come. Here are some tips from Mari Rezinas, President of Patrion Insurance, an insurance broker based in Riverside, CA.
 
It is important to determine the amount of liability coverage needed to protect your assets. This is the one type of auto coverage that everyone needs. Liability insurance protects your assets if you are the responsible party in an accident and others are injured or property is damaged. This insurance pays medical, hospital, lost income, rehabilitative care, pain and suffering, and property damage costs to the victim. It will also pay for your legal defense if necessary. It makes sense to choose the largest amount of liability insurance that you feel is affordable and will protect your valued assets.
Another type of coverage is Uninsured Motorist coverage. This type of coverage pays for your medical expenses, lost wages and other general damages when you or your passengers are injured in an accident caused by a driver who has no insurance. The amount paid by uninsured motorist bodily injury coverage is capped at a limit you select.
Next, you will need to decide if you should purchase collision and comprehensive insurance. Collision insurance covers the cost of damage to your vehicle, which is the result of an accident, no matter who is at fault. Comprehensive insurance takes care of the cost of auto damage from other causes such as theft, storms, floods and vandalism. If you are leasing or financing your vehicle, collision and comprehensive insurance are required and your lender will determine the required amounts of coverage.
If you have a new vehicle, which is not financed, it still makes sense to purchase this coverage to protect your investment. As your vehicle ages and depreciates in value however, there will come a time when the cost of carrying collision and comprehensive insurance will exceed the benefits. If the value of your vehicle is less than the sum of your premiums plus your deductible, you can do without this type of insurance.
To protect yourself and your passengers in the event of an accident, consider medical payments insurance. Medical payments insurance will cover the cost of medical, hospital or funeral expenses which result from an accident for both you and any passengers in your vehicle. When you have decided which coverage you need, it is time to start learning about insurance providers. Check the customer satisfaction records of these companies, and be sure that they are financially sound with the ability to pay claims; there is more to being a good insurance provider than just offering the lowest price.
Once you have narrowed down the possibilities, it is time to get quotes. Be sure that all your quotes are for identical amounts of coverage so that you can make an accurate price comparison. Your efforts will pay off with the peace of mind you’ll achieve in knowing you are getting the right coverage at the right price.
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