Rebecca Stutts Hovater
Auto insurance can be confusing, especially since state laws vary and require different kinds of coverage. Below is a general Q&A so that you can familiarize yourself with a few key terms as you make your way through the quote process.
Q: Who does my auto insurance policy cover?
A: An auto insurance policy typically covers you, your spouse, relatives who live in your home, and other licensed drivers who have permission to drive your insured vehicle.
Q: What are auto insurance “coverages”?
A: An auto insurance policy generally consists of several kinds of coverage, which represents different aspects of your overall auto insurance coverage. There are many kinds of coverage; some examples are liability, personal injury protection, medical payments, and collision. Because all 50 states have different auto insurance laws, coverage descriptions vary from state to state.
Q: What is an auto insurance “deductible”?
A: A deductible is the amount of your own money you have previously agreed to pay in the event of an accident or any other covered loss. Generally, this is the upper-limit of what you will pay in the event of a claim.
Q: Should I choose a higher or lower deductible?
A: Typically, choosing a higher deductible means a lower monthly payment; choosing a lower deductible means a higher monthly payment. When choosing a deductible, you must decide how much you would be willing and able to pay out-of-pocket if you ever had to file a claim. Would you have enough savings to pay a high deductible? Or would you rather pay a higher monthly premium and keep the deductible low?
Q: Should I carry collision and comprehensive coverage?
A: The laws differ from state to state. You may be required to carry collision or comprehensive coverage if your vehicle is leased or financed. Once you have paid off your car, and its value decreases, you might consider dropping this coverage to save money on your car insurance. Consider, though, whether the savings would be enough to offset the risk of having to pay the entire cost of repairing or replacing the vehicle.
Talking to your local agent is the best way to see what coverages are necessary in your state, as well as reviewing specific coverage for your policy.
