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Buying Auto Insurance

The provisions in auto insurance vary somewhat across the nation, based on state laws and regulations. There are still some general principles that apply virtually everywhere:

  • Liability coverage pays for damages that you cause to others, if you are judged to be at fault in an accident. In most states there are separate premiums charged for Bodily Injury coverage and Property Damage coverage.
  • Physical Damage coverage pays for damage to your car. This includes Collision coverage for damage incurred while driving. Another type of coverage, traditionally known as Comprehensive but may be called Other Than Collision coverage, pays for damage to or theft of your parked car.
  • Personal Injury Protection (PIP) pays for medical expenses incurred by you in an accident. It also may include income continuation benefits (if your injuries put you out of work), death benefits and funeral expenses.
  • Many drivers buy too much physical damage coverage and too little liability coverage. If your car is wrecked in an accident or stolen, your financial exposure is limited to the cost of replacing the car. However, if your driving results in serious injury or death to another person, or if you cause major damage to expensive property, you could lose your home and your savings and your pay may be garnished for years. Seek coverage in line with your assets.
  • If you decline to buy physical damage coverage (which you should consider if you own the car outright, with no loan or lease on it), you may still receive compensation if your car is damaged in an accident where the other driver is judged to be at fault. Your insurer should act on your behalf in such situations.
  • If you have a choice among insurers, learn what they do to customers who are involved in accidents.
    • Some insurers try to drop those who file a claim, or give them stiff increases in premiums. Even drivers involved in an accident but who were not at fault or who had clean driving records for years before can get rough treatment from their insurers.Consult your state's insurance commission for information on state laws that govern insurers' ability to drop customers or hike their premiums after an accident.
    • Also check information that the insurance commission may have on customer complaints.

      Some insurers are notorious for trying to stall customers and avoid paying legitimate claims. There are a variety of websites in which customers sound off about their experiences with insurers and other companies
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