Understanding the 8 primary elements that make up any solid low cost car insurance
package will help you determine exact dollar coverage in the event of an accident.
When buying car insurance in NJ, PA or MD, you should always examine how much protection
you need in each of these categories. While some may be forfeited due to individual
circumstances, it is advisable to balance cost of coverage against out-of-pocket
repair or replacement costs. We have outlined below simple explanations for each
category to help you become better informed when making your decision about how
much coverage you need.
Bodily injury coverage pays for any medical treatment, rehabilitation or funeral
costs sustained by another driver, his/her passengers, your passengers and/or pedestrians
if you are found at fault for causing an accident. This coverage also pays for legal
and settlement costs for pain and suffering claims.
When considering Bodily Injury coverage for low cost car insurance you will need
to determine what assets need protecting and at what dollar amount. Individuals
with few assets may not require as much coverage as individuals with higher dollar-valued
assets such as investments, real estate and substantial savings.
Property Damage Liability:
If you cause an accident, this coverage pays for the other driver’s vehicle or property
repairs or replacement, as well as property that may be damaged from the accident.
It is essential to consider how much you can afford to pay out-of-pocket should
the valuation for repairs exceed your coverage amount. Case in point: if you only
have $10,000 in coverage and hit a new Mercedes worth $80,000, can you afford to
make up the $70,000 shortfall?
Collision coverage pays out the full value of your vehicle regardless of at-fault
status for drivers covered under your auto policy. Again, coverage should be calculated
on how much deductable you can afford to pay out-of-pocket if you are in an accident.
If your car is old, you may want to eliminate this coverage altogether, which can
save on premiums. All financed or leased vehicles require collision coverage.
This coverage pays for repairs or replacement of your car if it has been damaged
due to wind, flood, fire, vandalism, animal collision, or if it has been stolen.
Much like Collision coverage, if your car is new, financed, or leased you will want
to buy adequate coverage for repairs or replacement. Again, possible out-of-pocket
expenses above and beyond any deductible should be taken into account. If your car
is older, and fully owned, this could be another category you may not need to buy.
Personal Injury Protection:
Often referred to as PIP, this coverage pays First Party Medical Payment Benefits
to physicians, hospitals, rehabilitation costs, convalescent services and some funeral
costs for you and the listed drivers on your policy if an accident occurs.
As the category implies, this coverage pays for damages incurred by either a hit-and-run
driver where a police report is filed or someone who may be underinsured if he/she
causes an accident.