Car Insurance 101

By Author: Marcus Stalder
Total Articles: 491
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The best way to get the lowest quotes on car insurance is to know what you are buying, what you need, what you don't need, and what your state requirements are. Follow our course on car insurance to understand the basic terms before you commit to any policy!

What is Third Party Liability Insurance?

When you engage in a contract or policy with an insurance company, you the insured are the first party, the insurance company is the second party, and any third party that is involved in a collision with you is the person covered with third party liability insurance. Third party liability insurance covers these third parties in the event of a collision whereby YOU are found to be at fault. If you are in an accident where you are not at fault, the other driver's third party liability coverage will cover your damages and losses. Liability insurance generally covers medical and legal bills incurred as the result of an accident.

What is Collision Insurance?

Collision insurance is exactly what it sounds like, and covers the owner of a vehicle that incurs loss or damages to their vehicle as a result of an accident ...
... for which THEY are found to be at fault. So, if you are the cause of an accident, your third party liability will cover the other party's damages, and your collision insurance will cover any damages sustained by you. Collision insurance is often considered the most expensive portion of a car insurance policy, and if you have an older car, may not be necessary. As well, your state may not require it.

What is Comprehensive Insurance?

Comprehensive insurance is designed to cover you in the event your vehicle sustains damages or losses that are not caused by collision. Comprehensive insurance covers events such as theft, vandalism, or damage to your car as a result of bad weather or even natural disasters. Even if you hit a large animal on the road and sustain damages to your car as a result would be another example of where comprehensive insurance is used. It is used to cover you financially in any event that does not involve collision.

What is Personal Injury Protection or Medical Payments Coverage?

These elements of an insurance policy often pertain to third party liability coverages, but can be additional coverages on their own. These terms cover medical expenses that are the result of an accident. It can also cover traveler's expenses and will cover medical bills under liability terms. Personal Injury Protection is an extension of these medical coverages, and also often covers things such as funeral costs and child care. This kind of coverage is generally a health insurance policy in the event of an accident, and will go above and beyond any coverage in your liability or collision amounts, but you often will have to pay extra for this.

Why Do I Want to Pay For Uninsured Motorist Coverage?

Sadly the car insurance quotes are so so high today because of the number of uninsured or underinsured motorists on the road. As well, the number of hit and run collisions is increasing every year. You don't want to be stuck in a situation where you've been hit by somebody, and they leave the scene leaving you to clean up both the physical and financial mess. You should at least seek car insurance quotes that include uninsured motorist protection, as this will protect you in the unlucky event that you have a collision with an uninsured driver. As well, some liability policies are very small, so if you have an accident with someone who has a low liability limit, your underinsured coverage will cap off what their liability policy will not.