Previous post:

Next post:

Car Insurance Basics

by retirebyforty on November 23, 2012 · 0 comments

in Guest Posts

Get free update via email:
RB40 won't spam you

car accident need insuranceFor new drivers, there are many questions about auto insurance. Do I need it? How much coverage should I get? What’s the different between collision and comprehensive insurance? Why does insurance cost so much more on a sports car?

Whether you like it or not, everyone needs car insurance. It’s the law and you can have your license taken away if you don’t have car insurance. Each state has different minimum coverage requirements and you can find out what they are on your state’s DMV website. When accidents happen, they will inevitably cost a lot of money. You need to buy at least the minimum amount of coverage dictated by your state. If you have some assets, you will probably need to increase your coverage or perhaps consider an umbrella policy. It’s easy to get car insurance quotes on the internet these days so there is no excuse to not having insurance.

Liability coverage

If you get into an accident with another driver, the liability coverage will pay for the other driver’s bodily injury and property damage if you are at fault. Health care and vehicle costs are so high in theUSnow that it’s very difficult for anyone to pay another party out of pocket. The liability coverage is usually the minimum insurance you will need.

Split limits

The liability coverage will only go up to a certain point. Each state has a required minimum coverage and it usually looks something like this.

$20,000/$40,000/$25,000

This means the policy will cover up to:

  • $20,000 for injury to one person
  • $40,000 for injury to more than one person
  • $25,000 for damage to property

It’s a good idea to carry more than the minimum coverage just because everything is so expensive these days. If your insurance policy isn’t enough to cover the cost of the other party’s vehicle, you might have to pay them out of your savings.

Rental coverage

Generally, the liability coverage extends to any rental cars, but you need to check with your insurer. You can also buy coverage from the rental car company at the time of service.

Collision coverage

Collision coverage will cover the cost of damage to your vehicle if you get into an accident. If you drive a jalopy, you probably don’t need collision coverage. On the other hand, if you are financing a new car, the lender will require collision coverage to protect their investment. There is a deductable associate with collision coverage that you will have to pay out of pocket first. One way to reduce collision coverage cost is to increase deductible. If you don’t get into accidents, then this is a good way to save on the insurance bill.

Comprehensive

Comprehensive coverage will cover the cost of damage to your vehicle by incidents that are not collisions. This is also subject to a deductible. If someone breaks into your car or vandalizes it, the comprehensive coverage will pay for any repairs.

Uninsured/Underinsured motorist coverage

This will provide coverage if the at fault party does not have insurance or is underinsured. If you don’t have health insurance, this coverage is a must. You can get into a bad accident with an uninsured driver and you’ll be stuck with the huge hospital bill.

Unfortunately, there are many drivers out there with no insurance. This is a bad situation because those drivers can lose their house, investments, and other assets if they get into an accident. Paying for insurance is no fun, but we all need the coverage.

Get free update via email:
Stay in touch with Joe and see how he handles Retiring by 40 and being a stay at home dad.
We hate spam just as much as you

{ 0 comments… add one now }

Leave a Comment