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If you have a car, you should have insurance for it because that’s the law. Not only that, but insurance coverage is seriously useful in case of an accident so that you don’t have to pay damages yourself. Insurance experts will tell you to buy as much auto insurance as you can afford, although there’s actually more to this than simply trying to sell you more insurance coverage than you need.

Buying as much coverage as you possibly can sound expensive, but the truth is that the most important part of this does not cost but the types of insurance that you’re investing in. In that sense, it may actually be the case that the coverage you need is more affordable than you might have expected. In order to make the right decisions, you need an understanding of how the different types of auto insurance work.

Essentially, shopping for auto insurance comes down to figuring out what you actually need and how much it will cost you. This means that the most costly mistake you could possibly make is being uninformed about what you’re buying because you could end up paying more than you actually need to for coverage other than what you really require. Knowledge about the basics of coverage should help you to save quite a bit of money in the long run.


Collision Coverage

The most obvious type of auto insurance is collision coverage, since most accidents do tend to involve collisions and this is often what causes the most costly damage. Collision coverage will cover any repairs that come as the result of an accident, or otherwise, you will receive the value of your car if repairs turn out to be more costly than the car is worth. Collision coverage is particularly important if you have a newer or more expensive car, while it might cost you more than it’s worth if you have an ageing jalopy that you got for a bargain. Do note that in some cases, you may be required to have collision coverage - this is especially true if your car has a lien holder.

Since some cars have more costly replacement parts, it’s only natural that you’ll end up paying more for insurance coverage in this case. Conversely, if you drive a car that’s known for being particularly safe in case of an accident, insurance companies will take this into account.


Personal Injury Protection

If you get into a serious accident, it’s kind of useless if your insurance covers the car but not your hospital bills. Needless to say, personal injury protection makes things much less painful for you when something completely unexpected comes up. Regardless of who might be at fault in case of an accident, personal injury protection will cover the medical costs of you and any passengers who might be travelling with you when the accident occurs. Indeed, you absolutely should purchase this type of coverage if you wish to be safe - though generally speaking, only about 80% of costs will be covered including loss of income.

Comprehensive Coverage

While many insurance plans cover accidents involving other vehicles, they might not cover everything. You could be driving home one night when a deer jumps in front of your car, or could possibly end up making the mistake of parking your car under a tree when a storm rolls in. Whether some incident occurs that isn’t otherwise covered or if someone steals your car, comprehensive car insurance can be a lifesaver.

If your car is less likely to be stolen, chances are that insurance companies will take this into account and you won’t have to pay so much for comprehensive coverage as insurance companies don't think that they’ll have to replace it. Depending on your situation and your car, it may or may not be worth your money to buy comprehensive coverage.


Liability Insurance

If you are in an accident that would otherwise be covered under your insurance and you’re to blame, liability insurance will protect you in this case. Liability insurance will cover any property damage as well as any resulting injuries that you might happen to inflict on anyone in case of an accident. While most states will have a required minimum for liability coverage, you should opt for additional coverage if you can afford to do so. After all, you don’t want to be caught in a situation where you end up having to fork out a lot of money because your policy has been exceeded.


Underinsured/Uninsured Motorist Protection

In spite of it being a legal requirement that all drivers should be insured, it remains an unfortunate reality that this isn’t always the case. If you get into an accident caused by someone who’s either uninsured or underinsured, you must have coverage for this so that you don’t have to end up paying yourself even when someone else is legally responsible for an accident. Fortunately, underinsured/uninsured motorist protection is fairly inexpensive as far as things go.

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