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What Insurance Coverage Do You Need To Drive
Sunday, 29 May 2016 19:09Automobile Insurance is mandatory in the U.S. Each state has it's own regulations that each Company must abide by when writing automobile policies. There are two different types of coverage available, one is mandatory coverage and the other is optional coverage.
Mandatory Coverage
Liability
Some times this is known as PL & PD. The PL is personal liability coverage, which pays for the injuries or lawsuits of the other party due to an accident you have caused. The PD is used to pay for the damages you caused to another persons property. Liability Insurance is very important and you should take the highest limit available to you. The difference in the premium is quite nominal.
Accident Benefits PIP
This coverage offers the medical assistance you need for any type of injury caused in a vehicle accident. There are a variety of benefits that are available to you such as rehabilitation, physiotherapy or loss of income. There have been many changes to the limits of this coverage. If you feel you need higher limits, you can have them increased at an additional cost.
Direct Compensation
This coverage responds to an accident in which you were not at fault. There would be no deductible to pay for the repair of your vehicle. Even though it will show on your record as a DC claim, that will confirm that you were not responsible for the accident.
Collision
If you are held responsible for an accident, you must have collision coverage to repair your vehicle. You would be responsible for your collision deductible on the policy. Collision is only required if you are leasing or financing the vehicle. If you are not, then it would be an optional coverage you can buy. |If you have a newer vehicle, it is recommended that you do buy this coverage. Once the vehicle is older it may not be necessary depending on the age.
Uninsured and Underinsured Motorist
If you are involved in an accident and the other party is uninsured, your policy will pay for any injuries or property damage. If the other party is underinsured, the family protection endorsement, as described below, will take care of the difference.
Comprehensive
This coverage is for damages to the vehicle by fire, theft, vandalism, hail and windshield. This is a mandatory coverage if the vehicle is leased or financed. If it is not, then it is an optional coverage you can buy. Comprehensive coverage would also cover you if someone broke into your vehicle and stole your stereo, GPS or even the tires and rims. When deciding on buying the coverage, check the cost of all items that are attached to the vehicle.
Endorsements
When you buy Automobile Insurance there are various types of 'endorsements' or additional coverages you can purchase for your protection. An endorsement is a rider that is attached to your policy which changes the original limits to a higher or lower limit.
Family Protection
A family protection endorsement covers you up to your liability limit. If you are involved in an accident and the other person involved is only carrying the minimum coverage, your policy would pick up the difference.
Optional Coverage
Increased Electronic Limits
There is usually a maximum limit of approximately $1,500 on electronics. If you feel your stereo or any object attached to the vehicle is worth more, you should look into increasing that amount.
Waiver of Depreciation
The waiver of depreciation covers your vehicle for the full purchase price for two years. It also ensures that any parts required for repair of the vehicle are brand new. Pairing GAP Insurance with this type of coverage is a must. It allows you to be fully covered financially for the first couple of years of buying a new vehicle.
Gap Insurance
If your vehicle is written off, gap insurance will pick up the difference between what you owe on the vehicle and what the insurance company is offering you. An example of this would be, you buy a new vehicle and total cost is $30,000 financed by your bank. You have an accident, and the Insurance Company is only going to offer you $25,000. The gap insurance picks up the difference for you. This is a must have endorsement for a new vehicle.
Loss of Use Rental Vehicle
Loss of use is the endorsement that allows you to rent a vehicle for use, while your vehicle is being repaired. If the vehicle ends up being written off and the Company offers you a settlement, the rental vehicle must be returned within 24-48 hrs.
Limit of Liability for Unowned Vehicles
The coverage is for vehicles you do not own. If you are using a rental car for a weekend, this is the type of insurance you need. If you do not have it, you will have to pay the insurance required at the rental car dealer which can be a few hundred dollars.
