Important coverages for the first time car insurance buyer
Important coverages for the first time car insurance buyer
The last thing on your mind when you're buying your first car is car insurance. Yet invariably new drivers get into maximum accidents or traffic infractions during their initial days in the car on the road. This is all the more reason a first time car insurance buyer should choose their car insurance policy wisely.
Here are some important coverages a first time car insurance buyer should actively consider:
Liability insurance as mandated by your state laws This is usually divided into Bodily Injury and Property damage liability. Liability coverage is always bought to cover others against any damage caused in a car accident in which you are found to be at fault. Both coverages have an upper limit for compensation per person and per accident. The minimum essential liability coverage amount varies from state to state; TX car insurance laws for example require you to carry Bodily injury liability of $25000 per person limited to $50000 per accident and Property damage liability of $25000 per accident. These are of course minimums and it is strongly recommended that if you're a new driver, you buy liability coverages atleast two to three times this amount.
Uninsured/Underinsured Motorist Coverage Uninsured Coverage pays for bodily injury (medical expenses and death) if the person who hit your car, doesn't carry car insurance. Similarly underinsured coverage pays for the same things if the other driver carries car insurance but it is not enough to cover your medical bills. While some states require that you carry uninsured coverage, others leave it to you to decide, but it's a good idea to have it on your car insurance policy especially if you're a first time car insurance buyer.
Personal Injury Protection or PIP (No-Fault) This coverage usually covers you against the following losses regardless of who is found at fault in an accident: Medical Expenses
Work Loss
Funeral Expenses
Survivors' Loss
Essential Services
This is also mandated by a few states like NY, PA, MA, MI and UT. In all 14 states have made it necessary for you to carry PIP or No-fault insurance; as a first time car insurance buyer, you should carry it in any case.
Collision and Comprehensive Coverages - Both these coverages deal only with loss arising out of damage to your car. While Collision, as the name suggests covers your car against any damage arising out of a collision (up to its actual cash value), Comprehensive covers damages arising because of fire, theft, glass breakage, riot, windstorm or hail. Both these coverages require you to have deductibles and any claim settled is only after you've paid the deductible amount. Check the blue book value of your car and then decide if it's really worth buying both or any one car insurance coverage; Remember, any claim you make on these will only be after you pay your deductible; limited to the blue book value of the car, which might not be a really significant amount if your car is an old beater, especially if your monthly premium costs are also factored in. However if you do decide to buy these, a good idea would be to keep deductibles high as these can significantly lower your premium rates.
Medical payments, Towing and labor, Full-Glass, Rental Reimbursement - These are some other optional coverages you can consider buying on your car insurance policy. Some car insurance carriers might provide you some of these as additional benefits at reduced or no cost if you have bought significant coverage from them. Check with your car insurance company what benefits they provide.
Gap Insurance A GAP insurance policy helps you pay off your lender the balance payments on your car in the event it gets totaled. While your car insurance company will pay you according to the blue book value of your car, it usually won't cover the balance payments that you owe your lender. Gap insurance steps in to fill this gap.
Also, while on the subject, car insurance companies have a variety of discounts to attract customers especially if they are first time car insurance buyers. Remember to check what all you are eligible for and what discounts you can work towards. A defensive driver's course for example, while helping you hone your driving skills, also gets you a discount on your car insurance for up to 3 years; and it can be done online as well!
It doesn't take much time to research which companies give you good rates and which ones give you good service; try to strike a balance so that you get maximum coverage at affordable rates. As a first time car insurance buyer getting this balance right might be a little frustrating initially but with a little bit of practice, you should soon be able to your car insurance coverages just right to meet your needs.
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