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Auto insurance coverage

An auto insurance coverage basically consists of six different coverages. All drivers, in most states, must possess an auto insurance policy that covers these six different areas. The following are the six elements of an auto insurance coverage:

1.     Liability insurance: This coverage is the basis of all auto insurance policies. A minimum amount is required in most states. The liability insurance pays for the injury and property damage expenses of the third party involved in the accident. Bodily injury expenses cover lost wages and medical bills. It is worthwhile to buy an auto insurance coverage for more than the minimum amount for liability insurance. In the case of a major accident, this extra coverage helps.

2.     Collision: If the owner/driver of a car is “at fault”, collision coverage will cover expenses for the repair of the vehicle. If the expenses for the repair is more than the actual cash value of the car, insurance company will pay the actual value of the car (less deductibles) and the car will be sent to an auction site where it is sold in auction for parts or scrap.

3.     Replacement cost: The amount required to replace your car or repair damages without considering depreciation.

4.     Depreciation: Decrease in value because of wear and tear and also age of the vehicle.

5.     Actual Cash Value: When a car is damaged in an accident, the insurance company determines the actual cash value of the car by subtracting depreciation cost from the replacement cost. It is worth considering replacement cost coverage as part of auto insurance coverage.

6.     Comprehensive: Auto insurance coverage for new cars or automobiles will invariably include comprehensive cover, as an option. This cover will pay for damages that were not caused by an accident. Fire, vandalism, theft, natural disaster etc., are the common causes for the damage to the car or automobile.

Depending on the value and age of the car, buying the right auto insurance coverage make one’s driving more stress free and comfortable. One can buy the policy with the required auto insurance coverage online and this website offers some of the best sources.