Types of Coverage: A need-to-know
The consumer may be cosseted by different types of coverage depending on what he purchased. There are different policies per type of coverage, and here are some that are usually available from almost every car insurance provider:
Liability – provides a fixed amount of coverage for the damages that the insurer becomes legally liable to pay. This is usually due to accident or negligence.
Collision – covers a vehicle engaged/involved in an accident. This is designed to cover the payments for the damaged car’s repair or the cash value of the car if it is not repairable.
Comprehensive – anything not related to collision.
Uninsured/underinsured – takes over when the other at-fault party does not have insurance or the insurance is not enough to cover all parties involved.
Loss of Use – basically covers rental fees, etc.
Loan/lease payoff – this is also known as the GAP insurance, where the consumer is protected from buying and market trends. Depreciation of the car’s value is foregone by this coverage, where the amount of the loan is relatively larger than the car’s original amount as the years pass.
Towing – also known as the roadside assistance coverage. This includes your car experiencing mechanical breakdowns, flat tires, and even gas outages. This pays for non-accident related tows.
Before finalizing any contract with the insurance provider, ask about these coverage so you’ll know what are and what aren’t covered by your insurance. This will avoid any misunderstandings in the future.
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