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Texas Car Insurance

5 Common Terms You Need To Understand Before Buying Car Insurance

Most people find it quite difficult to understand auto policy and they are not even sure why they pay what they pay. The fact that there are many different types of insurance has made it difficult to make the best choice when it comes to picking a policy. Before you buy any type of coverage in Texas, you should attempt to understand the options available as well as the meaning of the terms set.
Liability coverage
Liability coverage is the payment made to the other party if you cause an accident. This coverage comes in two types, bodily injury and property damage. Bodily injury is the payment that goes towards the other party’s medical expenses or funeral expenses if death has occurred. The property damage pays for the cost of repair or replacement of the other person’s car and any other property. When you buy liability coverage, it will not cover your car or your medical expenses.
Personal injury protection
Personal injury protection, also known as PIP, is a form of medical care where you get medical cover if you are injured in an accident. The coverage also pays for a caregiver if you need one, as well as paying for lost wages to the tune of 80%. It works a lot like Med pay in that it covers you and everyone else who was in the car when the accident occurred. The Texas auto policy indicates that by law, PIP of at least $2500 must be included as part of the coverage.

Uninsured or underinsured motorists’ coverage
Sometimes a driver who does not have insurance, or has insurance that is too low to cover your medical expenses, can cause an accident. In this type of scenario, the uninsured or underinsured motorists coverage (UM/UIM) comes into effect. This coverage also helps you if the accident is a hit and run, where you call the police but the other driver has fled the scene. According to the Texas law, any motorist who does not want this coverage has to provide a written rejection statement to the insurance company.
Collision coverage
Collision coverage is what you use to repair or replace your vehicle if you are in an accident that is your fault. This type of coverage comes with a deductible, or an amount of money that you have to pay out-of-pocket. It will not cover the whole amount that you need. Different insurance companies offer different deductibles, which can range from $50 to $1000. If your policy has a low deductible, you will pay a higher premium.
Collision coverage only pays the actual cash value or ACV of the car. This often translates to much lower than you paid for it, due to depreciation. If you are still paying the loan on your car, you have to get the collision coverage.
Comprehensive coverage
This type of coverage covers the cost of repair or replacement of the car if loss is due to any other reason other than an accident. It will help you to replace your stolen car, or a car damaged in a storm or other disasters. This coverage will also come with different deductibles that have to be paid for the policy to kick in. The coverage is also based on the Actual Cash Value of the car.