Wednesday, September 7, 2011

Why you need Auto insurance | What Auto insurance covers?

Why you need Auto insurance?

Auto insurance is an important purchase for most drivers. There are three major reasons to buy auto insurance.

1. To protect your assets :Auto insurance provides bodily injury and property damage liability coverage for accidents that happen to others for which you are responsible. The state-required minimum coverage may not be enough to protect you. Auto insurance also may cover physical damage for accident-related repairs to your insured car.

2. To satisfy your lender : If you have a car loan, most lenders require you to have insurance to protect their investment in your car by listing them on your policy. If you let your insurance lapse, your lender will 
likely have your car insured. The premium may be much higher (and the coverage much less) than a policy you would buy on your own. The lender can require you to pay this higher premium until you get your own auto insurance again.

3. To follow state laws: All states require you to be able to pay at least a minimum amount for auto accidents. Most people buy liability coverage or Personal Injury Protection (PIP) coverage to meet this requirement.

Some states require no-fault auto insurance.  In those states, your insurance company may pay at least some claims regardless of your level of fault for the accident.  Ask your insurance agent or the state insurance department whether you are in a no-fault state.

What the policy covers
An auto policy usually covers:
• Liability for injuries and damages to others that you are responsible for
• Uninsured Motorist (UM) for injuries and damages caused by a hit-and-run driver or a driver who has no auto insurance
• Underinsured Motorist (UIM) for injuries and damages when the at-fault driver has insurance but not enough coverage to pay for your losses.

Questions you should ask the agent:

• Are the agent and the insurance company licensed by my state insurance department? For how long? (Your state insurance department can confirm the answers to these questions.)
• What coverage am I required to buy?
• What doesn’t my policy cover?
• What coverage limits meet my needs?
• Should I buy comprehensive and collision coverage? (Compare the premium to what your car is worth.)  If so, which deductibles should I choose?
• Are there discounts that will lower my premium? 
• What is the deductible for uninsured and underinsured motorist coverage?
• How will my credit history affect my premium?  
• How will my driving record affect my premium?
• If I’m in an accident and it wasn’t my fault, how will this affect my insurance?
• If I’m in an accident and it was my fault, how will this affect my insurance?
• If I have an accident, can I use my own repair shop?