There are three basic types of coverage used in personal auto policies: liability, collision and comprehensive.

• Liability coverage pays for bodily injury and property damage to others caused by an accident that is your fault. Most states require liability insurance, which can protect you and your personal assets from lawsuits.
• Collision coverage pays for repairs to your car during an accident regardless of who is at fault. Normally you'll have to pay a deductible of $250 or $500 (or whatever is stipulated in your policy), and your insurer pays the rest.
• Comprehensive coverage pays for repairs to your car for damage caused by things such as theft, fire, vandalism, road debris, animals, etc.

Some states also require Uninsured Motorist coverage to pay for injury to you or damage to your car if you are hit by driver who does not have any insurance. Underinsured Motorist coverage pays for repairs when the person who hits you causes more damage than his or her liability coverage provides. A number of states also try to reduce claims and litigation by providing for nofault insurance to cover personal injury claims regardless of fault.
You can enhance your policies to provide for rental car reimbursement (while your car is in the shop), towing and other expenses.

The Cost of Insurance

Insurers figure your insurance rate, or the "premium" you pay, based on a number of factors, such as your driving record, the "steal-ability" and safety of your car, where you live and drive, your age, gender and marital status. Of course, some of these factors are beyond your control, but it is possible for you to reduce your rates by seeking group discounts through memberships in clubs or associations, and comparison shopping.

You can also reduce your premium by agreeing to pay a higher deductible in the event of an accident. It pays to be a safe driver; generally speaking, the fewer accidents you are involved in and the fewer violations you receive, the less you will pay for insurance.

Shopping for Auto Insurance

Finding good car insurance involves more than finding the lowest price. The quality and speed of service you receive when making a claim are valuable aspects of your policy. Here are several things to keep in mind when shopping for insurance:

• Compare the offerings of larger insurance carriers (like Allstate, Nationwide, SAFECO, State Farm, GEICO) to independent agents and online services.
• When comparing policies, be sure to ask for quotes on identical coverage. And ask to see the actual policy you're interested in purchasing.
• Know what you need from a policy and what you currently have. Ask questions.
• Don't let agents pressure you into buying more insurance than you need. If you feel you're being pressured, you may want to contact another agent or deal with a company that offers direct service over an 800 number.
• Consider buying a vehicle that insures at a lower rate. Generally speaking, the more your car is worth, the more you will have to pay to insure it.
• Make certain the company underwriting your insurance is reputable by consulting consumer agencies or your state's department of insurance. Ask friends and colleagues for referrals.
• Don't be afraid to ask about discounts. These are often available to those who ask.
• Consider raising the amount of your policy's deductible. This is one way to reduce your premium payments.
• If your car is older or has lost much of its value, consider dropping comprehensive and collision. You don't want to pay more in premiums than the car is worth.

Remember, you're interviewing prospective insurers to find who will help protect your valuable, personal asset. When it's all said and done, you're in the driver's seat.

The information above is intended for general informational purposes only. Please consult an automotive professional if you need more specific information.
Credit for this article goes to NAPA Online – www.napaonline.com

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