Terms to Help You Understand Your Auto Insurance

People grumble and complain about being forced to insure their automobiles, but most folks don't understand their auto insurance much less the benefits of having it. Whether your realize it or not, every time you leave home everything you own is literally in the trunk of your car!

Auto insurance is comprised of three parts, each protecting a different source of assets. Let's look at each component of your auto insurance and see why it's important that you maintain appropriate coverage.

Liability Insurance is basic and what the law requires. This takes care of the other person or persons if you are involved in an "at fault" accident. Many states require a motorist to carry 10/20/10 liability. But let's take a closer look at what these numbers mean and whether or not you need to increase your coverage.

The first portion of Liability coverage 10/20 is bodily injury; this means that the policy will pay up to $10,000 per person with a maximum of $20, 000 per accident. Enough, you say. Well what if there is more than one vehicle involved in the accident with you or worse, suppose someone is killed as a result. Consider the fact that you can be sued for damages and compensation can be awarded in many ways such as taking the equity out of your home, garnishing your wages and seizing your future earnings and/or inheritance....do you think this is enough?

The last 10 of the equation (10/20/10) is property damage - the property you damage as a result of the at fault accident. With the price of vehicles these days, $10,000 doesn't go far and if there are more than one vehicle involved, that amount is pro-rated per vehicle many times forcing the victims to file against their own auto insurance.