Title:How to buy Insurance
Author:
Buying insurance can be one of the trickiest and most demanding purchases you make for your vehicle. The #1 key to making sure you get the proper insurance package for you is to educate yourself. I have heard so many times, I bought this policy online and didn't check this option or that option because i didn’t know what it was. That missed box can wind up costing you literally thousands of dollars and/or massive legal battles. Let’s start with the basics. - Collision - This coverage protects your car when your car is moving.
- Comprehensive - This coverage covers your car when its stopped
- Liability - This coverage protects everyone else on the road with you should you hit them. This is required in most states.
- Deductible – This is the amount you have to pay to get your vehicle fixed.
- Uninsured/Underinsured Driver - This coverage protects you against the idiots out there with either no coverage or not enough.
- Medical - There are a few different names for this but basically its how much will the insurance company pay to fix you and your passengers if you get broke in an accident. There are typically 3 parts of this, how much they'll pay per person, how much per crash, and how much total. Generally higher is better.
- P.I.P. - Another medical coverage, this is the medical coverage in case someone uninsured hits you. This is also what pays you if you miss work due to an accident.
- Towing - This coverage will pay to have your car towed so far should it be rendered un-drivable in an accident. Not always available
- Rental Reimbursement - This means the company will pay for you to get a rental car while your car is being worked on. Also not always available
Now, looking at that, let's decide a few things. Liability is important. You are required to have it in most states. And let's face it, driving without liability is a shitty thing to do. Just assume liability is required. Medical is also important. Not just for you, but for anyone who happens to be riding with you. Legally, you could be held financially responsible if you cause (for example) an accident that results in someone receiving a serious head wound that leads to them being comatose. Next, we'll look at the coverage. If you have a new car, and you got a loan to pay for it, you will need to carry Full Coverage. That means you have a comprehensive AND collision policy. The bank wants to make sure their covered if you total your car. In this case those 2 are REQUIRED and you would be screwed if you drop it. What happens is the Bank will then take out a policy on your car for you and your payments from that point go to pay for insurance. The whole time you are uninsured, no money will be paid towards your vehicle. Some banks will also repossess a vehicle if you drop insurance on it. Say you have an old beater pick up truck. Total value is about $500. In this case it doesn’t make sense to pay $50 a month for a policy that will only pay out for $500, so it’s reasonable to only get coverage for liability and medical. If the value is over a few thousand dollars however it starts becoming more practical. When deciding if you want to drop the full coverage, you need to ask yourself, “Can I replace this vehicle if it gets totaled?” If the answer is no, then you need coverage. The amount of the deductible will determine a lot of your policy price. You can have a low (or no) deductible but that will mean a higher premium. If you have decent amount of money in savings then a higher deductible may be what you want. A $500 to $1000 coverage will be much cheaper that a $100 one. I maintain a $100 deductible for collision and a $250 for comprehensive because if I get into an accident the last thing I’m going to want to do is come up with $500 to $1000 to fix my car. Another point to consider is a higher deductible means the damage has to be more sever before insurance will even cover you. If you get into small fender bender type accidents then there is chance your insurance won’t cover you at all. While collision and comprehensive go hand in hand they can both be sold separately. If you park away from any trees, outside of a garage that may burn down, and your climate is mild that you don’t need to worry about natural disasters (floods, tornadoes, hurricanes, earthquakes) then you may not want to keep a comprehensive policy. Remember comprehensive covers your car when it’s not being driven. If you have a nice weekend cruiser or show car that gets parked and stored during the winter months you may not want to keep a collision policy on it while it’s parked. Since your not driving it, it makes no sense to keep it up right? Just be sure to activate your collision policy BEFORE you put it on the road. “Do I really need towing and rental reimbursement?” The short answer is no. It is not necessary that you keep either of these coverage’s. The questions you need to ask yourself are, “Can I pay $100 to $200 to have it towed in the even of an accident?” and “Can I get another vehicle while mine’s in the shop?” If the answer to both of these is yes, then don’t worry about it. Remember, some carriers don’t even offer this coverage. I hope this info has been helpful to you. Just remember to try to build a relationship with your local insurance agent. Stop in once in a while and pay them in the office. You don’t want to be ‘just another policy number’ when the time comes to need them. I only contact the office once every couple months, but my agent knows my name. Lastly, don’t be afraid to shop around. As much as I like my agent, I still shop around every 3 months or so. That’s the only way to make sure you are getting a good price. If there is any other questions you have about insurance, I will post a glossary of insurance terms, you can find many resources on the web, and call your current agent to answer your questions. Accidental Death Coverage Accidental death coverage is sometimes a part of your auto insurance policy's Personal Injury Protection or First Party Benefits plans. If someone who's covered dies from accident-related injuries, this type of auto insurance coverage may provide a payment to the insured's designated beneficiary. --------------------------------------------- Actual Cash Value You'll see this term a lot in auto insurance policies or if you ever have to file an auto insurance claim. That's because most auto insurance coverage reimburses you only for the actual cash value of your car. Your car's actual cash value is calculated by determining its original value, minus the amount your car has depreciated since you bought it. ------------------------------------------- Adjuster An adjuster is the person who investigates and settles auto insurance claims. ------------------------------------------- Anti-Theft Recovery System These systems consist of an electronic device that's installed in a concealed area of your car. If your car gets stolen, you can activate the device and it will emit a signal that can be used to locate your car. Such systems can be effective over a radius of several miles, depending on local geography. Ask your car dealer or nearby police department which brand of recovery systems are supported in your area. By installing an anti-theft recovery system, you may be eligible for an auto insurance discount. Benefit A benefit is the amount paid by an auto insurance company to you or your beneficiary when you file an auto insurance claim. ------------------------------------------- Bodily Injury Liability Coverage Bodily injury liability coverage protects you if you are held responsible for injuring someone in a car accident. This coverage helps pay for the injured party's medical expenses and lost wages. Bodily injury liability may also help pay your expenses in a related lawsuit. The amount covered is capped at the limits you select when you buy your auto insurance policy. ------------------------------------------- Broadform Collision Coverage This auto insurance coverage is available only in the state of Michigan. Broadform works like standard collision coverage, but also pays for collision damage to your insured car regardless of who's at fault. Although this auto insurance coverage will pay up to your car's actual cash value regardless of fault in an accident, you'll be responsible for the deductible amount you select if you're found to be more than 50 percent responsible for the accident. If you're less than 50 percent responsible, you won't have to pay this deductible. ------------------------------------------- Business/Commercial Use This classification means that you mainly use your car for business purposes (such as sales, service, and delivery calls) or work-related errands (like trips to the bank or post office), and other work-related driving. Commuting to and from work is not considered business use. Esurance doesn't currently provide auto insurance coverage for vehicles driven primarily for business/commercial use. (Not sure if this applies to you? We show you a checklist to help you figure out if business/commercial use applies to you when you get your car insurance quote.) ------------------------------------------- Claim An auto insurance claim is a policyholder's request to be reimbursed for a loss that's covered by car insurance. Collision Coverage Collision coverage helps pay for auto repair or replacement costs if your car hits another vehicle/object or if your car rolls over. The maximum amount paid for repair or replacement is the car's actual cash value, minus the amount of the deductible you choose when you buy your auto insurance policy. ------------------------------------------- Collision Deductible Waiver This auto insurance coverage pays the deductible for your collision coverage if you're involved in an accident in which an uninsured motorist is held legally responsible. This particular auto insurance coverage isn't available in all states. If it is available, you have to buy this coverage with collision coverage when you buy your auto insurance policy. ------------------------------------------- Commuting If you primarily use your car for commuting, this means that you mainly use the car to drive it to and from work or school. ------------------------------------------- Comprehensive Coverage Comprehensive coverage helps pay for damage to your car resulting from fire, certain natural disasters, falling objects, and vandalism. Theft's also covered. The maximum amount paid for repair or replacement is the car's actual cash value, minus the amount of the deductible you choose when you buy your auto insurance policy. ------------------------------------------- Continuously Insured The length of time you've been continuously insured is the number of years you have been covered by one or more insurance companies without a lapse in your auto insurance coverage. ------------------------------------------- Deductible For some types of auto insurance coverage, you're asked to choose a deductible. A deductible is the amount of damages you agree to pay for if you file an auto insurance claim. Though choosing a higher deductible can substantially lower your auto insurance premium, if you file an auto insurance claim, you'll have to pay the full, pre-established amount of the deductible out of your own pocket in order to receive payment from your auto insurance company. ------------------------------------------- Declarations The declarations page of your auto insurance policy summarizes the factual information essential to your auto insurance coverage: the policyholder's name and address, a description of the insured vehicles, the auto insurance premium, as well as the coverages, limits, and deductibles. ------------------------------------------- Defensive Driver and Driver Improvement Courses These courses consist of defensive driving training for drivers of all ages as well as "mature driver safety courses" intended for drivers age 55 and over. In certain states, you may qualify for an auto insurance discount if you're in the eligible age range and if you've taken one of these safety courses. ------------------------------------------- Depreciation Depreciation is the decline in an object's value due to age, wear and tear, or obsolescence. Effective Date The effective date is the date your auto insurance coverage begins. You are not covered by car insurance prior to an auto insurance policy's effective date. ------------------------------------------- Emergency Road Service This optional auto insurance coverage pays a fixed amount toward vehicle towing if your car breaks down or if your car gets disabled in an accident. Endorsements Also known as riders, endorsements are changes to the original insurance contract. In auto insurance coverage, endorsements may include changing your deductibles or adding a new car to your auto insurance policy. ------------------------------------------- Exclusions Exclusions are situations that are not covered by a given auto insurance policy. Specific exclusions are listed in your auto insurance policy. ------------------------------------------- Extraordinary Medical Extraordinary medical coverage is sometimes a part of Personal Injury Protection or First Party Benefits plans. Extraordinary medical coverage protects you in the event you suffer accident-related injuries that require serious and/or long-term medical care. Extraordinary medical coverage begins once you have exhausted the limit on your standard medical benefits coverage. ------------------------------------------- First Party Benefits First Party Benefits, or FPB, is a kind of optional auto insurance coverage available in Pennsylvania. Depending on the specific FPB coverages you select, if you're injured in an accident, FPB covers you and relatives residing in the same household for medical expenses, lost income, accidental death, and/or funeral costs. The amounts covered are capped at limits you select when you buy your auto insurance policy. ------------------------------------------- Full Coverage Auto Insurance Full coverage auto insurance denotes an insurance policy containing all auto insurance coverage legally required in a given state. The term “full coverage” does not imply the policyholder will always be fully covered. ------------------------------------------- Funeral Benefits Funeral benefits coverage is sometimes a part of your auto insurance policy's Personal Injury Protection or First Party Benefits plans. If a covered individual dies from accident-related injuries, this auto insurance coverage pays for a portion of funeral expenses, regardless of who is at fault in an accident. Covered costs are subject to the limits you choose when you buy your auto insurance policy. ------------------------------------------- Garaging Location The garaging location is where your insured car is parked most of the time. This location is usually indicated by the ZIP Code of the policyholder's primary residence. Notify Esurance if you normally keep your car in a town other than the one you live. Your garaging location will affect your auto insurance rates. ------------------------------------------- Income Loss Income Loss coverage is sometimes a part of your auto insurance policy's Personal Injury Protection or First Party Benefits plans. Income loss coverage protects you if you're unable to work due to accident-related injuries. This auto insurance coverage helps you recover portions of your lost salary and other expenses you may incur as you try to return to work. ------------------------------------------- Indemnity An indemnity is a pre-determined sum paid for a covered loss. ------------------------------------------- Insurance Claim Report Insurance claim reports provide details about auto insurance claims you or other insured drivers have filed with insurance companies. These reports are provided by independent consumer reporting agencies that collect auto insurance claim information from a variety of insurance companies. One of the most common agencies issuing such reports is C.L.U.E., the Comprehensive Loss Underwriting Exchange. ------------------------------------------- Insurance Score Insurance scores are based on analytical models that objectively measure the relative likelihood of future insurance losses based on your credit history. These scores and analyses of their significance are provided by independent consumer reporting agencies. ------------------------------------------- Insured The insured is an individual covered by a given auto insurance policy. Judgment A judgment is a final decision rendered by a court of law. For example, in a lawsuit related to an auto accident, where Kate hit Eric’s fence, the court determined that Kate was wholly responsible for the accident. The judgment determined that Kate should pay for the costs of repairing Eric’s fence. ------------------------------------------- Liability Liability is a term that broadly means legal responsibility. If you run a stop sign and hit another car, you may be found liable for the damages to the other driver's car. ------------------------------------------- Liability Coverage Liability coverage protects you from having to deplete your assets to pay for damages if you're held responsible for injuries or damages arising from a car accident. The two main types of liability coverages in an auto insurance policy are bodily injury and property damage. ------------------------------------------- Limits Limits are the maximum amount an insurance company will pay for a covered loss. Though you can choose your limits for certain coverages, some states require you to buy certain levels of auto insurance coverage. In such states, you'll have to choose limits that at least meet your state's auto insurance requirements. ------------------------------------------- Medical Benefits Medical Benefits coverage is sometimes a part of your auto insurance policy's Personal Injury Protection or First Party Benefits plans. Medical expenses that are the direct result of accident-related injuries are covered. Covered medical expenses are capped at the limits you choose when you buy your auto insurance policy. ------------------------------------------- Medical Payments Coverage This auto insurance coverage pays medical bills and/or funeral expenses if a covered driver and/or accompanying passengers are injured or killed while in an insured vehicle, regardless of fault in an accident. This may also cover policyholders and their family members when in others' vehicles, or when policyholders and their family members are on foot and hit by a car. The amount paid by medical payments coverage is capped at the limit you choose when your buy your auto insurance policy. ------------------------------------------- Motor Vehicle Report A Motor Vehicle Report (MVR) provides information on your driving record. This report includes accidents and moving violations. Auto insurance companies obtain MVRs from states where you or other insured drivers have been licensed to drive. National Credit File The National Credit File provides objective consumer information regarding the financial history of an individual. Information contained in this report is often used to calculate insurance scores. ------------------------------------------- No-Fault Insurance If a type of auto insurance coverage is described as no-fault, this generally refers to the way the insurance company settles a covered auto insurance claim. Generally, if a certain coverage is no-fault, responsibility doesn't have to be assigned before an auto insurance claim gets settled. ------------------------------------------- No-Fault States In some states, called no-fault states, insurance companies are legally required to pay a policyholder's covered losses, regardless of who's held responsible for an accident. Some no-fault states also restrict the right to sue for damages. In states without no-fault regulations, the insurance company covering the person who caused an accident is forced to pay for covered losses. ------------------------------------------- Non-Passive Alarm A non-passive alarm has to be manually activated every time you leave the car. If someone attempts to open your car, the alarm sounds, and the system disables the automobile's starter, ignition system, and/or fuel circuit. You may qualify for an auto insurance discount if your car is equipped with such an alarm. ------------------------------------------- Passive Alarm Passive alarms are automatically activated and emit warning sounds when someone tries to get into your car. Once the passive alarm has been triggered, the system disables the automobile's starter, ignition system, and/or fuel circuit. You may receive an auto insurance discount if your car is fitted with such an alarm. Personal Injury Protection Personal Injury Protection, or PIP, is a kind of auto insurance coverage available only in certain states, where it's often mandatory. PIP generally includes expanded coverage of accident-related medical costs. In some states, PIP also pays for lost wages and similar losses. Specific protections afforded by this type of auto insurance coverage and limits on PIP payments vary widely from state to state. ------------------------------------------- Pleasure Use If you use your car for pleasure, this means that you typically drive it for fun, with no regular commuting or business use. ------------------------------------------- Policy Expiration Date Your auto insurance policy's expiration date is the date when auto insurance coverage ends if your auto insurance policy isn't renewed. The expiration date can be found on the declarations page of your auto insurance policy, on a proof of insurance card, or on a recent auto insurance renewal notice. ------------------------------------------- Policy Term A policy term is the length of time an auto insurance policy is valid. Most auto insurance policies have a policy term of 6 months to 1 year. ------------------------------------------- Primary Driver The primary driver is the person who drives a car most frequently. ------------------------------------------- Primary Use A vehicle's primary use is how the car is typically used. Auto insurance companies usually classify primary use as commuting, business/commercial, or pleasure use. ------------------------------------------- Primary Policyholder The primary policyholder is the person who serves as the main point of contact with Esurance. Since he/she is the main point of contact, we need the primary policyholder's valid email address so that we can send account updates, auto insurance renewal notices, and other policy-related communication. Typically, the primary policyholder is also the person billed for your auto insurance policy from Esurance. If you prefer, any other person listed on your auto insurance policy can also be billed for your auto insurance premium. ------------------------------------------- Property Damage Liability Coverage Property damage liability coverage protects you if you are held responsible for damaging someone else's property in a car accident. Property damage coverage helps you reimburse another person for their damaged property (such as a car, a fence, or a home). This type of auto insurance coverage also helps pay your expenses in a related lawsuit. The amount covered by property damage liability is capped at the limit you choose when you buy your auto insurance policy. ------------------------------------------- Rental Car Reimbursement Rental car reimbursement is an optional kind of auto insurance coverage that helps pay for your rental car expenses if an insured car is damaged or stolen and you need a rental car. ------------------------------------------- SR-22 An SR-22 is an official document that shows proof of financial responsibility. Courts may require an SR-22 or a similar form for people convicted of certain traffic violations. ------------------------------------------- Secondary Driver A secondary driver is one of the drivers listed on your auto insurance policy who's insured for driving an insured vehicle. However, this driver is not a car's primary driver. A secondary driver is also sometimes known as an occasional driver in auto insurance terminology. ------------------------------------------- Supplemental Spousal Liability Supplemental spousal liability, or SSL, is an optional coverage, available only in New York State. This type of auto insurance coverage protects you if you’re found to be at fault in an accident resulting in injury or fatality to your spouse. The amount covered by SSL is capped at the limit you choose when you buy your auto insurance policy. ------------------------------------------- Stacking - Uninsured/Underinsured Motorist Bodily Injury Coverage Stacking is an option available when you buy uninsured/underinsured motorist bodily injury coverage. Stacking changes the limits for this type of auto insurance coverage. When you choose stacking, uninsured/underinsured motorist bodily injury limits increase by the number of cars you're insuring. If you buy $50,000/$100,000 limits for uninsured/underinsured motorist bodily injury coverage, choose stacking, and insure 2 cars, stacked limits for this coverage then equal $100,000/$200,000. Tort Tort is a legal term used to describe instances when someone is deemed legally responsible for injuring another person or damaging his/her property. Some states ask you to select a tort provision. In these states, you can limit your right to sue for non-monetary damages (like pain and suffering) in exchange for a reduced auto insurance premium. ------------------------------------------- Towing Coverage This type of auto insurance coverage is optional, and pays a fixed amount toward towing if your car breaks down or if it's disabled in an accident. ------------------------------------------- Underinsured Motorist Bodily Injury Coverage Underinsured motorist bodily injury coverage is available in some states, where it's often mandatory. This type of auto insurance coverage pays for your medical expenses, lost wages, and other damages when you or your passengers are injured in an accident caused by a driver who has insufficient auto insurance coverage. This kind of auto insurance coverage typically pays the difference between the coverage limit you select and the other driver's bodily injury coverage limit. The amount covered by underinsured motorist bodily injury is capped at the limit you choose when you buy your auto insurance policy. ------------------------------------------- Underinsured Motorist Property Damage Coverage Underinsured motorist property damage coverage is available in some states, where it's often mandatory. This type of auto insurance coverage protects you if your car is damaged in an accident caused by a driver who has insufficient auto insurance coverage. Other specific protection afforded by this type of auto insurance coverage varies from state to state. This kind of auto insurance coverage pays the difference between the coverage limit you select and the other driver's property damage coverage limit. The amount covered by underinsured motorist property damage is capped at the limit you choose when you buy your auto insurance policy. ------------------------------------------- Uninsured Motorist Bodily Injury Coverage Uninsured motorist bodily injury coverage is available in some states, where it's often mandatory. This kind of auto insurance coverage pays for your medical expenses, lost wages, and other general damages when you or your passengers are injured in an accident caused by a driver who has no car insurance. Uninsured motorist coverage also pays for injuries sustained in hit-and-run accidents. The amount covered by uninsured motorist bodily injury is capped at the limit you choose when you buy your auto insurance policy. ------------------------------------------- Uninsured Motorist Property Damage Coverage Uninsured motorist property damage coverage is available in some states, where it's often mandatory. This kind of auto insurance coverage protects you if your vehicle is damaged in an accident caused by a driver who has no car insurance. Other protection afforded by this type of auto insurance coverage varies from state to state. The amount covered by uninsured motorist bodily injury is capped at the limit you choose when you buy your auto insurance policy. In some states, you'll need to pay a deductible each time you file an auto insurance claim. ------------------------------------------- Uninsured/Underinsured Motorist Bodily Injury Coverage In some states, both uninsured and underinsured motorist bodily injury are bundled into a single coverage. In the states where this type of auto insurance coverage offered, it may be mandatory. This kind of auto insurance coverage pays for your medical expenses, lost wages, and other damages when you or your passengers are injured in an accident caused by a driver who doesn't have enough car insurance, or who completely lacks auto insurance coverage. This type of auto insurance coverage also pays for injuries sustained in hit-and-run accidents. The amount covered by uninsured/underinsured motorist bodily injury is capped at the limit you choose when you buy your auto insurance policy. ------------------------------------------- VIN The VIN, short for Vehicle Identification Number, is the unique 17-digit number found on every car. The VIN contains the vehicle's serial number, as well as abbreviations for the make, model, and year. The VIN appears on your vehicle registration card. It's also engraved in your car, near the base of the windshield on the driver's side dashboard and/or on the edge of the driver's side door. Though you don't need to enter your VIN when you get a car insurance quote from Esurance, you will need to provide your car's VIN when you buy your auto insurance policy. |
