There are many different ways to insure your automobile. You can get a fully decked out policy with a very low deductible for a high monthly premium. Or, you can get the bare bones minimum with a high deductible for a low monthly premium. There are also many terms and definitions that you need to know when you start out looking for car insurance. Four of the most common coverage terms that you need to know are: Collision, Comprehensive, Gap Insurance and Endorsements.
Collision Insurance – What Does It Cover
Insurance which covers damages to your car from an accident when you are at fault is called Collision Insurance. This standard policy covers any repairs up to the fair value of your car. This value can be lower than replacing your car or the balance of a car loan. It is possible to owe more on your car than what your insurance company gives you for your car.
Comprehensive Coverage – What Is It?
Although similar to Collision Insurance, comprehensive coverage is different in that it covers damages to your car for reasons unknown. Vandalism, flood, theft, fire and storm destruction are all considered in this category, but check with your policy for exact details of coverage. This, too, will cover repair charges up to fair value of your car after your deductible and is not mandatory by state law, but will be necessary if you still have a balance due on your loan.
Coverage usually comes with a deductible amount you must pay before the company will pick up the repair charges. The higher the deductible amount, the lower the cost of this policy. This Collision Insurance coverage is not required by state law, but if your car is leased from a dealer or being financed, it's usually a requirement to carry this coverage and Gap Insurance would certainly be a wise consideration.
Gap Insurance – A Financial Lifesaver
If your car is totaled and you get less for it than you owe you will still be responsible for paying off your car loan. One way to protect against this possibility is with Gap Insurance. Gap Insurance covers the difference between what you owe on your car and what you would get from your insurance company in the case of a totaled car. Gap Insurance also covers the amount of money you might owe at the end of a lease.
Endorsements - Available Policy Extras
Policy extras are called Automobile Insurance Endorsements, or Riders. Endorsements are additional pieces of insurance that are added to your regular car policy like towing a stalled or broken down car, windshield glass breakage, rental expense and emergency roadside service. It is important to know what extras are included in your policy as they can save you a lot of money if you happen to need any of these services.
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