Auto Insurance

Whether you are considering buying a new car or already own one, choosing what type of auto insurance to get is an important decision as a car owner. Sure, most people find dealing with insurance to be an annoyance at best and at worst a real hassle, but it helps to look at auto insurance as an investment instead of a cost. After all, your insurance payments are likely not going to cost as much as the car? Still, auto insurance gets a bad rep because of all the demands from insurance companies and blatant discrimination on age, sex and other factors. So it is no wonder most people would rather just like to get it over it and go for the first offer they get. That’s usually not a good idea though. If you are looking for cheap auto insurance, the best method is to get a free online auto insurance quote. Often you will discover that you can actually both save money on premiums AND get increased coverage. Due diligence and all that. It pays off!

Before we get to talking about how premiums are calculated we will take a look at the main different types of insurance and what they can do for you.

For information on additional type of automotive insurance coverage refer to the Vehicle Insurance series at NorCalCars.com.

Liability Only Insurance

Auto insurance is regulated on the state level. That means no guide will ever be complete for your specific situation, but there is still some similarities that you should know about. The most important of these is the law that requires all drivers regardless of vehicle type to hold third party liability insurance. Third party liability insurance is needed to make sure you will be able to pay for any damages or injuries you may inflict to other people, which is perfectly reasonable. But besides the need to have liability insurance, the individual states have different regulations for how much coverage you need. They decide this using three numbers. For example, California may require you to have 15/25/100, which means you need insurance for at least 15,000 dollars worth of liability insurance for one victim, 25.000 dollars for two victims and 100.000 dollars in total worth of insurance for more than that. You will need to check with your local traffic authorities before deciding on your insurance limits.

Many drivers often choose higher insurance limits than the legal minimum. The legal limits guarantee the victim some compensation. But if you were to have an accident were you inflicted damage or injury for lets say 100,000 dollars to a single victim, then you would still be out 75.000 dollars which you could be sued for. Few people would be able to show that amount of money on a short notice. So there is very good arguments for signing more insurance than the legal minimum, though of course higher insurance limits results in higher premiums.

Full Coverage Car Insurances

This is the kind of auto insurance that most people would likely be interested in purchasing. It is also the most popular type of auto insurance because it is comprehensive and covers just about all risks you can face as a driver. Full coverage car insurance usually consists of three different policies: Liability, Collision and Comprehensive (OTC).

Liability insurance has already been covered, so we won't go into details about this one. It has the same coverage as liability only and protects you and other people in case of accident. The limits will have to be individually negotiated before signing.

Collision coverage is an insurance policy that covers collisions with other vehicles. No surprise there, but the policy is really designed to cover you and not the victim, who will be covered under liability insurance. So this is your protection for the damages done to your car when you have a collision and you are to blame. Collision insurance is in most cases required to be able to finance your car with a finance company.

Comprehensive insurance is also referred to as OTC or 'other than collision' insurance. This is your safeguard against any damage that may happen to your car excluding collisions, such as vandalism, fire, bad weather and many more. You are also protected against theft. With comprehensive insurance you are usually protected against collisions with animals, which is something to keep in mind if you live in an area with large animals that cross roads.

When you are out to buy insurance, the important thing to remember is that its not only about price or coverage, it is a combination. What you are looking for is the best value that your budget will get you.