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Auto Insurance Primer What is auto insurance? Auto insurance (or car insurance, motor insurance) is insurance consumers can purchase for cars, trucks, and other vehicles. Its primary use is to provide protection against losses incurred. By buying auto insurance, depending on the type of coverage purchased, the consumer may be protected against: * The cost of repairing the vehicle following an accident * The cost of purchasing a new vehicle if it is stolen or damaged beyond economic repair * Legal liability claims against the driver or owner of the vehicle following the vehicle causing damage or injury to a third party. Liability insurance covers only the last point, while comprehensive insurance covers all three. Even comprehensive insurance, however, doesn't fully cover the risk associated with buying a new car. Due to the sharp decline in value immediately following purchase, there is generally a period in which the remaining car payments exceed the compensation the insurer will pay for a "totaled" (destroyed, or written-off) vehicle. So-called GAP insurance was established in the early 1980's to provide protection to consumers based upon buying and market trends. The escalating price of cars, extended term auto loans, and the increasing popularity of leasing gave birth to GAP protection. GAP waivers provide protection for consumers when a "gap" exists between the actual value of their vehicle and the amount of money owed to the bank or leasing company. In some countries including New Zealand and Australia market structures mean that people are more likely to buy a nearly new car than a new car so this is less of a problem. In the United States, liability insurance covers claims against the policy holder and generally, any other operator of the insured's vehicle, provided they do not live at the same address as the policy holder and are not specifically excluded on the policy. In the case of those living at the same address, they must specifically be covered on the policy. Thus it is necessary for example, when a family member comes of driving age they must be added on to the policy. Liability insurance generally does not protect the policy holder if they operate any vehicles other than their own. When you drive a vehicle owned by another party, you are covered under that party's policy. Non-owners policies may be offered that would cover an insured on any vehicle they drive. This coverage is available only to those who do not own their own vehicle. Generally, liability coverage does extend when you rent a car. However, in most cases only liability applies. Any additional coverage, such as comprehensive policies, i.e. "full coverage" may not apply. Full coverage premiums are based on, among other factors, the value of the insured's vehicle. This coverage may not apply to rental cars because the insurance company does not want to assume responsibility for a claim greater than the value of the insured's vehicle, assuming that a rental car may be worth more than the insured's vehicle. Some states, such as Minnesota, may require that it extend to rental cars. Most rental car companies offer insurance to cover damage to the rental vehicle. In some regions, the costs associated with not having access to the vehicle ("Loss of Use") is also covered. How to Choose Travel Medical Insurance That is almost four out of ten Americans buying travel insurance in 2010 Did they benefit from the insurance they bought? • 17% of those people were able to claim their insurance • Almost 40% of those claimers used the insurance for trip cancellations • 37% of claimers used the insurance for their delayed or interrupted trips • On the other hand, 11.6% have used it for their medical expenses during their trips • While 9% used their insurance for their lost and delayed baggage • Lastly, 0.02% used the claims for death So what happened to the rest that did not claim their insurance? • Some did not experience any medical problem with their trip • Some were not able to claim because their claim was invalidated. • Some were not able to claim because the country they visited was not covered or part of the insurance plan • Some were not able to claim because the sickness they got was not covered. • Some were not able to claim because the insurance company does not cover their preexisting medical condition such as diabetes and high blood pressure. • Some did not understand the insurance policy that came with their insurance. • And some did not need it at all How can you prevent those from happening to you? • First of all, do a background check on the insurance company that you will choose. Take a quick glance on its page on BBB's (Better Business Bureau) website to see if it has a good record of not upsetting its clients. • Do not just get a travel insurance that will cover checkups. It is a good choice as a precaution, but it will not save your money in any way. If they found out that you were sick, your insurance will not be capable of paying for you. • Make sure that you get a health travel insurance that has high medical expense coverage. A medical insurance that can cover more than $200,000 of medical bills should be enough. • If you are not going to visit a country that is considered a medical spot, consider getting an insurance that can cover your evacuation back to the US for medical care. • Always know all the things that the insurance will not be able to cover. If you are going for an adventure trip, choose an insurance that can cover extreme activities such as bungee jumping, hand gliding, and mountain hiking. • Do not limit your insurance to cover your health alone. Many things could happen to your flight, and you do not want to be uncovered when any of that happens. Of course, get a quote first on how much the insurance company will charge you for the packages that you choose. Compare it to the price of your previous insurance. If you are a student, you might want to check special offers for students who travel abroad, which might land you a good discounted package.
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