When someone begins shopping for auto insurance for the first time, the process may seem a bit confusing. Liability coverage is required in nearly every state, but collision and comprehensive insurance are optional unless the vehicle is being financed. Collision coverage pays for damage to the vehicle when an accident occurs, whereas comprehensive insurance covers other types of incidents. Examples include damage from hailstorms and vandalism.
Financial Considerations
Choosing to forego optional coverage keeps premiums lower but increases the person's financial risk if an accident or other incident ever happens.
Another aspect to consider is the deductible, which is the amount a person is responsible for paying before coverage begins. Selecting a low deductible, such as $100, results in a more expensive premium. A higher deductible, such as $1,000, means lower premiums but a larger amount to pay in the event of a damaging incident.
Understanding Coverage Types
Insurers consider an automobile striking a moving vehicle or a stationary object as a collision. Collision coverage thus applies when a driver hits a building, a tree, or a utility pole. However, comprehensive insurance is the part of the policy that covers collisions with wildlife.
If the replacement cost is higher than the deductible, comprehensive coverage applies when someone breaks into a vehicle by smashing a window. But it doesn't pay the replacement cost of any belongings that were stolen.
No Rental Car Coverage
Most auto insurance policies also don't cover damage caused to a rented vehicle. That's because the policy essentially is attached to one automobile and not to the policyholder. For this reason, rental car companies require customers to buy insurance from them or provide it in another form.
Towing and Roadside Assistance
Some insurers offer free towing if the policyholder has collision or comprehensive coverage. This might be a feature to look for if the person has bought an older vehicle or lives in an area where floods occasionally happen.
Another option offered by some auto insurance companies is a complete roadside assistance plan. This can help policyholders avoid towing if they ever need someone to change a tire or charge the battery.
Making Effective Comparisons
For effective comparisons of several policies that differ in features and pricing, vehicle owners will want to consult with an independent agent. Independent agencies represent more than one auto insurance provider and can offer more variety. Consumers, then, are better able to find the features they prefer at a favorable price.
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