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Auto insurance vital components.
Having auto insurance is a way of protecting yourself from financial
disaster if you are involved in an accident. Auto insurance consists
of a few major components:
- bodily injury covers potential injuries to other people, medical
expenses and other costs associated with the injury. This coverage
is mandatory in many states. It also protects your financial
assets from lawsuits.
- property damage covers losses due to any damage to someone’s
property caused by you.
Other components.
- comprehensive insurance will pay for any
damage to your car caused by theft, storm, flood etc. This coverage
is necessary if your car loan is not paid off.
- collision covers expenses associated with fixing
a car if you are involved in an accident, and it is required by
lenders.
- personal injury insurance covers car’s
passengers if they are injured, regardless of who was at fault
- underinsured and uninsured coverage is supposed
to pay for any bodily injuries and property damage for uninsured
motorists with whom you may have an accident, or motorists who
do not possess adequate insurance coverage.
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There are other minor auto insurance components that
can be included in a policy, e.g. cost of towing a damaged automobile
and rental car fees while your car is being fixed after an accident.
Main factors that determine the cost.
Insurance companies use statistical data to figure out the likelihood
of an auto accident. The major factors are: driver’s age,
sex, marital status, profession, place where you live (state and
city), the type of vehicle you drive, your driving record and
previous accidents, if any. Insurance companies will also look
at the driver’s credit
score and number of miles traveled when quoting an auto insurance
policy.
Auto insurance deductibles.
A deductible is the amount that you have to pay, before the
insurance company pays its part. Collision and comprehensive coverage
always has a deductible, and it could range from $100 and up.
Choosing a high deductible is a way of lowering the cost of
the auto insurance premium, however, it is important to choose
a deductible which you are actually able to pay if involved in
an auto accident.
See also: lower
auto insurance, online
auto insurance, car
loan
Related topics: AAA car
insurance, understanding
auto insurance
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