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Zhi Finance » Automobile insurance that you must know when you are afraid to ask

Automobile insurance that you must know when you are afraid to ask

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Even if you buy car insurance, in case of an accident, your claim range may not be enough to protect you and your family. Automobile insurance clauses often look like passwords that you can’t understand. I hope you will never use them.

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Automobile insurance has two major components: liability insurance is used to provide financial assistance to others when you cause a traffic accident; Collision and comprehensive insurance is used for your car in case of vehicle accident, window breakage, vehicle theft, etc.

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Here are the key terms you need to fully understand.

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Limit of liability insurance:

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Each state has set a minimum liability insurance limit to determine the type of liability insurance you need. There are three groups of figures for the liability insurance limit – the insurance broker may have mentioned it when you bought the car insurance. In California, the minimum liability insurance limit is 15/30/5, which means that your insurance will pay at least $15000 per person for personal injury insurance, $30000 per accident, and at least $5000 for property insurance. If you only buy the minimum liability insurance limit, you may be in trouble. If you cause any traffic accident other than the 1972 truck with wooden bumper, you will pay for others’ cars from your own savings – or overdraw future earnings. If there are more than two people in the damaged car, it will cost more than 30000 dollars for care, and you will pay again.

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The deductible is the share that the insurance company is exempt from compensation and you have to pay yourself. Deductible amount is not applicable to liability insurance; Only for yourself and your car. If you hit the concrete column in the parking lot when reversing (I use my own experience as an example), you have to pay the deductible. The insurance company will be responsible for the remaining part of the maintenance cost.

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Money saving tips:

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When you take big risks and the insurance company takes small risks, your premium is cheaper. You have two choices: increase the deductible or reduce the liability insurance limit.

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Increase the deductible. The ultimate way to save money is not to buy collision insurance at all. If you drive an old car, just as I have driven an old car for decades in the past, you can bear all the repair and replacement costs caused by the damage or theft of the car. If you drive any car other than a broken car, you have to buy comprehensive collision insurance, but you can increase the deductible.

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Reduce the limit of liability insurance. Many people buy only the limit of liability insurance required by the state government. This is very risky. Not only are your current assets at risk, but your ability to save money in the future will also be jeopardized. You may be forced to use your income in the next few years to settle the claim. Increasing the limit of liability insurance is beneficial to people who work well and save a lot. If you focus on frugality, you may have a net worth of housing, college education savings, or other assets. These assets are at risk. Once you are over 30, it will not be expensive to increase the liability insurance limit – provided you have a good driving record. You are very unlikely to have a serious car accident, multiple injuries and serious property damage. Insurance companies know that they will not charge too much to share your risks.

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Generally speaking, when buying insurance, it is very wise for the insurance company to compensate you for risks that you cannot bear. Similarly, it is unwise for an insurance company to compensate you for the risks you can take. Therefore, increase the deductible to the limit that you can bear, and use the insurance deposit to increase the limit of your liability insurance so as to compensate for the risks that you cannot bear. Talk to your insurance broker today to ensure that your insurance coverage meets your needs.