What Can I Do to Protect Myself When I Buy Car Insurance?
Most drivers are required to carry insurance, but having insurance is more than a requirement, it's smart. Carrying auto insurance on your car is the best way to protect yourself and the investment you made in purchasing your vehicle. However, with so many different kinds of policies, varying premiums and different insurance companies, you may feel confused or frustrated about buying insurance. Here is how to protect yourself when you buy insurance.
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State Laws
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Some states have laws requiring drivers to carry policies with certain minimums. For example, in New Jersey, all vehicles must carry liability insurance, personal injury protection (PIP) and uninsured motorist coverage. Find out what protections and minimums your state requires from the Department of Motor Vehicles in your state or from your insurance agent.
Enough Coverage.
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Insurance policies usually base coverage on the fair market value of your car. You want to take out a policy that covers the full value of your vehicle. For example, if your car is worth $18,000, make sure your policy covers $18,000 and is not limited to $10,000.
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Deductible
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A deductible is how much you must pay out of pocket before the insurance company pays the rest. For example, if your car insurance policy has a $500 deductible, you have to pay $500 out of your pocket no matter if the total claim value is $500 or $5,000. How high your deductible is depends on your premiums. Generally speaking, the higher the deductible, the lower the premium. However, you don't want to pick a deductible that you can't afford just to save on your premium. Make sure you pick a deductible you can handle in the circumstance you'll need to pay it.
Uninsured or Underinsured Coverage
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Make sure your policy includes uninsured and underinsured coverage. This coverage protects you in situations where the person who hit you has no insurance or inadequate insurance. Without this coverage, you may be stuck paying all of the costs out of pocket with little to no recourse.
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