Keep the following points in mind:
- Auto insurance is a package policy that combines several different coverages. Liability insurance is split into bodily injury and property damage coverage. Bodily injury pays for costs related to injury or death to a pedestrian or person in another vehicle. Property damage pays to repair or replace another person's car, fence, building or other property. Choose liability limits that adequately protect your financial assets.
- Uninsured and underinsured motorist coverages pay injury-related damages when you are hit by a motorist driving without auto insurance or one that has limits below your policy's underinsured motorist coverage. It is best to match UM and UIM limits to your bodily injury coverage.
- Physical damage insurance on your vehicle is optional, but lenders typically insist on it. Coverage is divided into comprehensive and collision. Collision pays for damage caused by an accident with another car or fixed object. Comprehensive pays for damage caused by events like theft, vandalism, hail, fire, falling objects and animals. Both have deductibles. High deductibles lower the premium, but you pay more out-of-pocket when a loss occurs.
- Insurance companies offer a variety of endorsements. Towing, rental car reimbursement, uninsured motorist property damage, gap coverage, new car replacement and custom/nonfactory equipment are examples of buy-back options.
- Filing a loss with your own insurer is a 'first-party' claim subject to terms outlined in your insurance policy.
- Requesting damages from the other driver's insurance company is a 'third-party' claim. The loss is settled according to terms outline in the other individual's insurance policy.