Basic Insurance Policies Explained

By Author: Norris Rios
Total Articles: 572
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If you have taken the time to see what the insurance market has to offer in order to get your vehicle insured you have certainly noticed that there are a lot of different types of policies to choose from. Starting with rather expensive fully comprehensive policies that cover your car against virtually any peril to stripped down offers with only the basic coverage types but for the lowest price out there. And taking the fact that millions of households are looking for ways to optimize their budgets all over the country it's clear why basic policies seem so attractive for a lot of people.

Sure, having an affordable car insurance policy is something that we all want these days. But apart from the obvious question of money saving there's another important aspect to any insurance policy we have to keep in mind - coverage. It's really important to know that your policy has the necessary coverage to meet your individual insurance needs, not only save your money. So when looking into basic car insurance policies it's really important to understand what such policies have to offer.

As a matter of fact, basic policies ...
... live up to their name and don't offer much. The only type of coverage you'll find in such policy is the third party liability. Third party liability is the only mandatory type of car insurance coverage and consists of bodily injury and property damage coverage. It pays to the other party involved in an accident in case you were at fault. Otherwise it's the other party's liability coverage that will cover your costs in case of an accident you didn't cause. And that's pretty much all you get with a basic insurance. There are no other types of coverage included and quite often the amount of third party liability offered with such policies is just above the level of local state minimum limits.

What's really good about such policies is that they are really cheap. By keeping the coverage to the bare minimums you'll typically get the lowest premiums possible with a basic insurance policy. And that's really attractive for those who need some cost cutting. On the other hand, such a limited coverage will suit only a select number of car owners, namely those who drive used cars and have paid out their auto loans long time ago. Why? Because those who use auto loans to finance new vehicles are usually imposed to purchase collision and comprehensive coverage by lending institutions. And those who have already paid out their loans but still have some value on their cars will definitely want to include collision and comprehensive as well.

Besides, having third party liability at the bare minimum is also risky. While state limits are set as for the policy to cover an average accident according to local medical and repair costs, running into a more serious accident will easily top these limits and will force you to cover the difference out of your pocket. That's why you'll have to be really cautious about the contents of your basic policy if you want your car insurance to be both cheap and adequate.