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Do you have the right car insurance? Do you have enough coverage? While most people know whether they have liability, collision and/or comprehensive coverage, few people pay much attention to their insurance coverage until after they've been in an accident. Shopping for car insurance is a financial planning topic that is often overlooked, since most teenagers are added to mom and dad's insurance policy when they first get behind the wheel, and then later shop for the least expensive policy when they have to the pay the bill on their own. In this article we'll go over car insurance coverage and give you some tips to help you get the most for your money.
The Basic Types of Coverage
Protecting your assets and your health are two of the primary benefits of car insurance. Getting the proper coverage is the first step in the process. These are the basic types of coverage with which most people are familiar:
-Liability: This coverage pays for third-party personal injury and death-related claims, as well as any damage to another person's property that occurs as a result of your automobile accident. Liability coverage is required in all but a few states.
- Collision: This coverage pays to repair your car after an accident. It is required if you have a loan against your vehicle because the car isn't really yours - it belongs to the bank, which wants to avoid getting stuck with a wrecked car.
-Comprehensive: This coverage pays for damage incurred as a result of theft, vandalism, fire, water, etc. If you paid cash for your car or paid off your car loan, you may not need collision or comprehensive coverage, particularly if the blue book value of your car is less than $5,000.
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