Introduction to Car Insurance Basics
In all actuality, insurance is as straightforward as two components and only plain two components need to be insured. Structural lines become technically as 3 major divisions namely there is coverage for you, coverage for others and coverage for your vehicle. The simpler way of looking at this is to say that there are two major parts i.e., liability and physical damage or property damage.
Understanding Liability and Physical Damage
The liability can also be further subdivided into two pieces; that is what deals with the division of your coverage and other people’s coverage. Liability coverage is also, as it sounds, the amount of money that one provides to cover for some damages caused by their insured. This amount can be found in the insurance documents.
Whatever state in the union you are in, all states issue the same; you are liable 100% to the amount depending upon the state that you are in. In others, it is a 50/50. If you go 51% & more your opinion is taken as the liable party, this is where the TPL is exploited to the full potential. Most states practice what is known as split or comparative negligence, where it says that if you are responsible for 51% of the fault, you get 51% of the damages reimbursed or your insurance reimburses 51% of the damages that your insurance was responsible for. The liability coverage is perhaps the easiest area to explain or think about.
Types of Liability Coverage
What coverages are we referring to? There are two portions of the liability coverage. The first part is also called bodily injury coverage, which means in case you injure someone, that is the coverage that will take care of the amount of Medical for that person which is a limit in your insurance. So, if you hurt somebody, and let us assume that you had $100,000 worth of coverage then it is going to pay up to $100,000 or what’s referred to as a maximum. Many policies get quite muddled up as they are referred to as split coverages, and I think 95% of the people have this version of insurance to where it is one hundred thousand dollars per person then three hundred thousand dollars per any one event.
In Michigan where the liability is cheap, its $250,000 maintained and $500,000 liable for any one accident. In Texas there is a lot of people that have the 100/300, it all depends on what that risk is worth in the area that you are in. There’s a lot of factors. I will link a content that goes a little bit more in depth on the factors of insurance that makes the rate goes high, low and fluctuates. But in general, that liability is going to pay that amount per person and per accident if there is a total for that claim.
Property Damage Liability
The next item is the liability for damages to the property. The liability for damages to property arises if you dent someone’s car, hammer a wall of their house or a pole. Every structure that does not belong to you which is damaged is covered under this also. There are no other protections being provided under dramatization here, because the only risks being discussed here are the risks to others not to you. Therefore, if in your favor you dent someone’s house, or in your favor, your car gets immersed, property damage is going to be that.
If we follow that 100,000/300,000 rule or the commonly accepted 250,000/500,000 within the company, then you assuredly have at least 100,000 for property damage insurance professionally on hand. If you have the upper shown limits then it’s probably telling that limit will be sufficient to protect you. This is, I think, a different discussion which you should have with an agent whether you have enough income or you have enough assets that you wish to protect more or less depending on which life stage you are in.
In any case, if you are looking for a new insurance policy, I will leave a link in the description where you can arrange working with a local agent. What is nice about most of these is the fact that most of them are independent so they are ready to look for many companies for you without you have to flood making a hundred telephone calls.
All you do is provide them with your information, then the employee does all the work, she markets every individual looking for companies that would be most suitable for them, and she will go on from there.
Uninsured and Underinsured Motorist Coverage
Let’s use the reverse UNO card because the liability and the property damage can also work to your advantage. That’s the misplaced responsibility for the other people’s protection. But now we want to protect ourselves in the event that something goes wrong. There are a lot of uninsured motorists out there, which is more than before, mostly because the rates have kind of creeped up for the last three years, which makes it even more reasonable why you would want to cover you if not more than you normally would cover – in fact, a case of uninsured motorist or underinsured motorist.
So, you have underinsured in case that person like we said was a person who didn’t have any insurance and that person hit you and you got injured and that person ran away and it doesn’t mean there’s no way you found them, whatever that case is you are going to insure both your self’s medical expenses and those who were in your vehicle as well. Commonly you are going to max it to whatever you carry for bodily injury; so, for example if you carry the $250000 bodily injury then probably you are going to carry $250000 uninsured motorist bodily injury for yourself as well.
Protecting Yourself Beyond the Minimum
But now there is a kind of sub-piece called underinsured motorist. That’s where if you know for certain that you are going to provide a good coverage; so, where we talk about $250,000 or let’s say, ask for $500,000, you are simply going to make sure that you are covered well and that $500,000 will basically help cover the difference if say someone had a lower than that. Well, you wanted to sue someone that kept their policies with $50k but you wanted them to insure you for $500,000 and they were liable. Well then, insurance will pay out up to 50k. Your disorderly conduct or indecent exposure people. In all likelihood, that person will not be able to pay you a great deal of money in a lawsuit since they will most likely be on a tight budget and there were lean months. So, there is no use in pursuing them.
So, what can be done is go beyond the coverages that they maintain, so uninsured motorist takes up the gap; theirs take the $50,000, yours takes the rest of whichever amount up to the limit you have set. In which case we said $500,000 has been fully explored, in which case your insurance will only pay $450 instead covering any medical bill towards you or anyone in your vehicle.
Same thing: the UNO card is still out. We’re reverse covering our vehicle. Given that it is not partisan, not all states do this except for a few states that have uninsured property damage or under their property damage. That’s you protecting your car if the person hits you doesn’t have or doesn’t have enough insurance. So, if they hit and run, whatever the case is, you are covered, rather, you would, whatever it is that on your vehicle, you would still have the access coverage on that will cover the value of damages caused.
The Importance of Comprehensive Coverage
Moving on to full coverage Mark, what you mean, isn’t it better do all of us carry full coverage? Yes, that’s correct, that is why it varies in every state. Those of you that are watching this, I would say 8 out of ten of the ones that watching this video will likely have standard full insurance. It is literally a combination of words. This is something we are going to come back to in part two. While we would want to put it more, I mean we’re going to go a little bit further here, but the full coverage piece is aimed basically at covering the vehicle in the event unscrupulous things happen.
In the state where I mentioned you have to have your own uninsured and underinsured property damage, that also is a little bit different because the reason being because if you are at fault that’s full coverage, if you cause an accident however you don’t have full coverage even if they cause the accident if that makes sense. It depends on the state. Your agent will go a little bit further in depth, if you are curious about that.
If anyone has additional questions, let me know in the comment section below, and I will attempt to engage in discussion in understanding those. The second piece is the property damage: the physical damage of your flat car. For those of you that want the so-called PLPD, that is, personal liability, such as we just said, and property damage; that is the coverage that you have to bear because it is a requirement from the regions. In 99% of the states, there’s some few states that you only have to carry some pedestrian coverages. No one ever does these things because there’s no point, but there are options there.
Which brings us to that second part: ensuring your vehicle over and above the basic coverage for those that do not wish to have the basic coverage. All of the things that we mentioned in that scenario, you’re going to cover your vehicle, especially if you have a Loan, they are going to require that you cover your vehicle in case of an accident. This property damage is usually two-fold, first- is the comprehensive; this encompasses stolen vehicles a car vandalism, you run over a deer, any animal runs in to you, falls in to this category of comprehensive.
Then they include collision injury; this one concerns about if one has a collision accident. If a house, a car, a curb or anything in your vehicle in particular is known as a tire flew off from her car and hit your car. That’s a collision; that’s going to take place on your car. At the same time there are certain aspects of that which, there is a deductible that you are able to take do this, and so therefore, how much of the cost we are talking here, more price all of Evan’s insurance, we are talking about cost out of pocket to you.
So, if you are going to pay your deductible that this is the amount that you are going to pay out of pocket, only that I am going to say that this first, for this part you are going to pay the first five hundred dollars of this claim.
That is the reason very likely my insurance will reduce the amount due to the fact that part of the amount has been paid by the insured. It’s exactly similar to taking out a loan in the sense that if a down payment in made by the borrower, then the lender is likely to charge lower interest. That’s your good faith, I guess you could say, in the claim of knowing that you are not so much of a hopeful person when claiming the hope that you will not have to make a claim to the extent that at all, or at least up until these types of things are still viable. Because if you have that on the hook, they’re not going to have you on the hook either.
Understanding Deductibles and Premiums
Now you can increase or decrease that deductible amount. For example, deductibles could greater than Maundy’s, places have $1000 deductibles or 2000. States may take a toll on this. These are the two main aspects that you have to consider with insurance. There are additional ones if you want to examine the individual descriptions of those elements in more detail. There is more than this Car Insurance 101 video, which you might say is a very heavy dose of a very basic subject.
Conclusion and Next Steps
If you only want to obtain new insurance and are looking for more affordable prices in more discounts than in reality, I want to. I have got My discount Video Right here. This is Muhammad Ismail with Car4Save. I’m going to catch you in the next one.
