Article 3 of 10 in Buying Car Insurance - What to Know Before You Buy
Understanding the type of coverage available in your auto insurance policy will help you to understand what to do'after a car accident. The main parts of your car insurance policy are:
Before purchasing an auto insurance policy, you will be asked to identify how much coverage you want across the main types. Your choices will influence how much your premium payments are, so you need to understand what each type of coverage offers you:
TIP: Both comprehensive and collision coverage section of the policy usually require you to select a deductible paymentamount that you will need to pay should anything happen to your car.
Commercial Auto Coverage
If you are conducting a business of any kind with your auto (driver for hire, transporting, using your vehicle say in a catering business or sales) you may consider commercial auto insurance. Commercial Auto Insurance or a Business Auto Policy is usually written with higher limits due to the higher risk. Make sure you explain fully the business you are conducting and all the information concerning how your automobile will be used in this business. This allows your insurance company to underwrite the risk properly which will give you the best coverage possible for your business.
You should also consider Gap Insurance, particularly if you are leasing or financing your car. Gap Insurance covers you in the event you find yourself upside down on a vehicle loan. If your car is considered a total loss in an accident, the insurance company will pay you the actually cash value (ACV) of the vehicle.If this amount is less than your loan payoff, then you will still owe money for the car, even though it has been destroyed in an accident. Gap insurance solves this problem by paying the difference between what you owe and what the car is worth. Before you purchase a car insurance policy, ask your carrier about this coverage. It could save you from making a payment on a car you no longer can drive.
If you have high assets or at a point in life where you're making a very good income, you may consider purchasing an umbrella policy or a personal liability policy. A bad accident could exhaust your liability limit on your auto policy. At this point, you are on the hook for anything that your insurance company refuses to pay. Usually purchased with a minimum limit of a million dollars, this policy increases the limits by a million dollars above your present auto liability limits. In the unfortunate event of a bad accident where you exhaust your limits under your liability coverage, your umbrella policy will then kick in, paying above those underlying auto limits up to one million dollars.
TIP: For as little as sometimes $200, this policy can give you the extra million dollars in coverage that you could be liable for in a bad accident. In addition to providing extended liability coverage, umbrella policies also add additional types of coverage such as libel or slander.
How much auto insurance coverage you need is up to you, so take some time to evaluate your coverage needs before finalizing your auto insurance policy. For more information on any of these types of auto coverage or for a free quote click this link to go to the Free Advice quote center.
For more information about getting the right car insurance policy to fit your needs, check out the following articles:
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