Everyone that's driven a car understands that insurance is a good way to protect their investment. In fact, leasing agencies and lending institutions will usually require the purchase of an insurance policy to protect their investment too. After all, until that lease is up, or the car loan is paid off, those companies are part owners of the vehicle.
Since insurance companies have been regulated for a number of years, there is a great deal of standardized terminology used in car insurance policies. That's good news for the consumer because it makes comparing quotes easier.
All automobile insurance carries offer consumers the opportunity to purchase two basic categories of coverage: liability insurance, and physical damage to property. In the sections below, we're going to take a closer look at how each type of coverage is structured.
Liability coverage provides for the reimbursement of damages the policyholder might have caused, and if they are found to be at fault. Within car insurance policies, there are two basic types of liability coverage:
Each state has established a minimum value for the liability insurance drivers need to carry within a car insurance policy. This coverage is for the protection of other parties that are injured.
Minimum liability coverage generally starts around $50,000, and can be as high as $1,000,000 on most standard policies.
The personal injury protection, or PIP, pays for the policyholder's medical treatment as well as the treatment of others that are covered under the policy. This is a form of a no-fault insurance coverage. Personal injury protection is further divided into two types:
PIP insurance protection ranges from $25,000 to as much as $250,000 on a standard car insurance policy.
There are basically two types of physical damage protection that a policy provides: collision, and comprehensive.
Comprehensive and collision coverage are subject to deductibles, and the amount of insurance needed depends on the value of the car being insured. This brings us to our final topic: Figuring out how to compare insurance quotes.
Unfortunately, not all car insurance policies are created equally. It takes careful study, and time, to make a fair comparison. On the positive side, it's easy for the insurance company to accurately determine the value of the car.
For a new car or used car, an insurance company usually requires the car's VIN, or vehicle identification number. The VIN is a code consisting of numbers and letters that identify the car's make, model, engine option, assembly plant, and model year. Just by knowing a car's VIN, an insurance company can accurately place a value on the automobile.
When comparing quotes, make sure each company is providing the same level of coverage. This includes validating the deductibles paid are also consistent between policies.
In addition to the above, many car insurance companies offer discounts on premiums for the following:
Finally, there are several factors that may affect the cost of insurance, including:
About the Author - Automobile Insurance Basics