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Collision insurance is a separate part of your policy. This is the part
of your car insurance policy that covers the damage to your vehicle if
you were in the wrong. Generally, you will be covered for the fair
market value of your vehicle, and if the damage to your car is more than
that value then your car will be wrote off and you’ll receive a cash
settlement. Some companies offer a guaranteed replacement cost rider on
new cars. If this interests you, you’ll need to ask.
Both comprehensive and collision have a deductible attached to them.
This is the amount you will pay before your insurance policy kicks in
and pays the balance. The higher your deductible the lower your premiums
will be. However, you need to make sure that the deductible you choose
is something you will be able to afford otherwise you could be left in a
bind.
Liability insurance is generally required in most states. The minimum
required does vary but usually it’s far too low anyway. Experts
recommend that you should carry a minimum of $1 million and some are
even recommending $2 million. This coverage is incase the accident is
your fault and there are injuries or deaths. You will be financially on
the hook and if you are underinsured, you could find yourself in
financial ruins.
Insurance endorsements cover things like rentals, towing, and roadside
assistance. They are completely optional but can provide additional
benefits to you.
There you have it, your car insurance policy broken down in a manner you
can better understand. Of course, each insurance company provider is
totally different so it’s important to always read your policy cover to
cover. In fact, the exclusions is probably the most important part of
any insurance policy, and the most important factor along with price
when choosing a car insurance provider.
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