Knowing Auto Insurance Key Terms Can Help You Get a Good Deal

If you need to get auto insurance for the first time, or just want to change to a different type of coverage, you may be overwhelmed. There are plenty of phrases that many people have never heard of, and in order to make the right choice, you need to be aware of the main definitions. Find out what the most common key terms mean before you choose a new provider or plan.

Liability coverage tends to be the minimum amount needed in every state, as it pays for any damage to the cars you may hit in an accident. It also pays for any medical bills of the drivers that you hit. Of course, there is a maximum amount of coverage, and once you hit the maximum amount, you are responsible for paying the rest. For this reason, you need to make sure the liability section of your auto insurance plan is sufficiently high if you want to avoid being sued in a major or multiple vehicle accident. I

Collision coverage is usually not required in most states since it pays for damage to your vehicle if the accident is your fault. If you do not include this in your plan, you will have to pay for the damages, or for a completely new car if it is totaled, so tread carefully when considering whether to buy this. Similarly, a comprehensive policy is not required, but when you have it, your provider offers money to fix or replace your vehicle when a fire, theft, or vandalism damages it.

Of course, you have to pay your deductible first, and then your provider should cover the rest. A low deductible means you do not have to spend much when the company pays to fix your vehicle, but this can make your monthly premium payments high. A high deductible, on the other hand, can lower your monthly payments but requires you to spend more on fixing your vehicle when it is damaged. Most providers simply take the deductible off the amount they will offer you, so you never have to send them money, but instead, you just get less cash to repair or replace your automobile.

You can also get an uninsured motorist policy, which ensures that your auto insurance company pays for damages to your car if you are hit by an uninsured driver. Some drivers do not have high enough limits in their policy to cover the damage to your automobile, at which time underinsured driver coverage comes in handy. This allows you to repair your automobile without having to sue the at-fault driver for not having enough funds to help.

Now that you know the basics of auto insurance, you should call or use online forms to get price quotes. Note that your premium amount will likely depend on your driving history and credit record, so be prepared for high prices if either is bad. Shopping around to compare quotes, though, should help you get the best price possible before buying auto insurance.