When it comes time to get auto insurance for your car, you will be faced with decisions about various types of available insurance. Basically, there are six different parts of an insurance policy. Some of them are mandatory when you purchase car insurance, and some may be optional. Here is a brief explanation of the different types.
This part allows your car to be paid for when you get into an accident. If you were to hit another vehicle, another vehicle hits your car, or you hit another object (such as a tree), then the damage to your vehicle is covered. It also will cover your vehicle if your car rolls over, too. There are some limitations to coverage, such as driving stunts and racing your car, which could void your coverage for one of those scenarios. This coverage is for when you are driving your car.
This coverage will protect your car when you are not driving it or when it is parked. These situations are not listed under Collision Insurance. This means that if your car were caught in a fire, flood, or is vandalized, stolen, or damaged by a falling object, it would be covered. For older cars that are not worth much, you probably should drop the Comprehensive part of your policy.
This part of your policy provides medical coverage for any bodily injuries to you or your passengers while you are driving. It also covers people who drive your car with your permission, or you and your passengers when you are driving someone else's car. Funerals are covered in the event that any deaths may occur. This component of your policy may be called Personal Injury Protection in some states.
Bodily Injury Liability:
Whenever someone else sues you due to bodily injury or death, this part of the policy covers you. There are a number of exceptions under this portion of the policy which determine who may not be covered and under what circumstances they are not covered. It would be a good idea to familiarize yourself with them, or the liability of the lawsuit may be your responsibility. That could bankrupt you so make sure this portion is included in the policy.
Property Damage Liability:
Any property that becomes damaged as a result of your driving, or if your vehicle is driven by someone that you gave the authorization to drive is covered under this part of the car insurance policy. This portion is usually written together with the Bodily Injury Liability.
Uninsured and Underinsured Motorist Coverage:
This is coverage for you when the other driver did not purchase car insurance or did not have enough car insurance to cover the accident. With more than 25% of motorists being uninsured in some states, you definitely need this. It will also cover you in the event of a hit-and-run driver. It is available in my state of Pennsylvania but not available in all states.
Each of these sections of your policy can be adjusted in order to lower your car insurance rates if necessary. Ask your insurance agent what the required minimum legal amounts are and go upwards from there. You should seek to have these minimums and more, if possible. You can also reduce your insurance costs by raising your collision and comprehensive deductible amounts to a higher amount. If you do so you may be responsible for a higher amount of damage to your car. Usually, the deductibles can be raised to $500, $1000, or even more, which could be your responsibility to pay the repair shop that fixes your car.