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- An automobile insurance policy requires liability coverage to insure the other driver and his vehicle. If you have an accident, your insurance company pays for the damage to the other driver's car and for injuries he incurs. All states but New Hampshire require liability insurance or proof of responsibility for all vehicles driven in the state. States set the limits for liability requirements and abbreviate the limits to figures like 25/50/15. These numbers mean that the maximum the insurer pays is $25,000 for one person, $50,000 for an accident and $15,000 in property damage limits. The minimum limits set by the state may not be sufficient, but vehicle owners often purchase the minimum required.
- Coverage for your automobile includes comprehensive and collision. Collision insurance covers your vehicle if you are at fault in an accident. Comprehensive covers your car for damages other than collision. A limb may fall on your vehicle, or a fire or hailstorm may damage it. If you have comprehensive, your insurance pays vehicle damages after you pay the deductible. The deductible may be as low as $100 or as high as $1,000, and the cost of the insurance depends on the value of the vehicle and the deductible you choose.
- Uninsured or under-insured motorist coverage protects you if you are in an accident with a driver who has no insurance or minimum limits. This insurance also covers hit-and-run accidents. If you suffer injuries from an accident with an uninsured or under-insured motorist, your insurance pays hospital and medical bills under your uninsured motorist coverage. Whether you need uninsured and under-insured motorist insurance depends on many factors, including the state you live in.
- Some states have a high percentage of uninsured vehicles, and your chances of being involved in an accident is greater than in other states. If you have good health insurance coverage, you may not need uninsured motorist coverage, but uninsured motorist coverage pays for pain and suffering in addition to medical. Some states require personal injury protection or medical payments coverage added to the automobile policy, and you may have some medical insurance in that coverage as well. Be aware that medical payments and personal injury protection coverages have low limits. If you have an expensive vehicle or if you are in a high-paying profession, you may want uninsured motorist coverage to cover the car or your loss of income.
Liability Insurance
Comprehensive and Collision
Uninsured and Under-Insured Motorist Coverage
Insurance Decisions
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