Month: November 2015

Types of Vehicle Insurance

If you operate a vehicle in Salt Lake City it is very important (and legally required) to have adequate insurance. Without insurance if you have a car accident you may face steep repair costs in an auto body repair shop, a hospital or a court room. The following is a brief and general overview of typical types of insurance coverage available for vehicles in the United States. Keep in mind, terms of specific policies will vary between different insurance providers and the laws governing insurance coverage also differ from state to state.

Bodily Injury

Bodily injury liability provides coverage for damages to another person’s physical body resulting from a car accident. Typically, a bodily injury insurance will cover medical costs and tort liability up to a limit set by the policy. Many state2-collision-repair-advertisements require bodily injury coverage for all vehicle operators.

Collision

Collision insurance will cover losses related to collisions with other vehicles and is optional in most circumstances. Collision insurance covers the cost of repairs or replacement costs if the vehicle is totaled.

Comprehensive Coverage

Comprehensive coverage covers losses that result from theft, fire, flood, vandalism or other causes not associated with a collision.

Liability

Liability or “casualty” insurance covers bodily injury or property damage caused by a car accident for which the insured driver is responsible. This coverage will cover direct expenses (repair and medical bills) as well as tort liability.

Loss of Use

A loss of use policy will provide monetary reimbursement for costs associated with rental expenses while your vehicle is being repaired provided the damage being repaired was covered by the policy.

Property Damage

Property Damage covers damage to another person’s property. This can apply to a vehicle or other structures located on their real property damaged in an accident (e.g. a mailbox or fence).

Uninsured or Underinsured Motorist Coverage

Uninsured motorist insurance covers losses in situations where the party responsible or at fault for damages resulting from a car accident does not have insurance or has insufficient insurance to cover the loss. Uninsured motorist policies typically cover costs associated with vehicle repairs as well as medical bills for the insured.

Depreciation

 

carAlthough a necessary expense, financially speaking, a car is not a good investment. This is true because a car will depreciate in value immediately after it is purchased and will continue to depreciate the older it gets. The specific amount of depreciation will vary from car to car but probably the most important factor to determine the amount of depreciation and the rate at which a car will depreciate is whether the car is new or used. Both new and used cars depreciate; however, new cars will depreciate much faster than used cars.

This depreciation will occur in a generally predictable manner. Typically, new cars depreciate 20% by the end of the first year after purchase. The moment a person drives a new car off the lot it becomes a used car and after this transformation approximately 10 percent of its value will evaporate. By the end of the first year after purchase, that same car will depreciate an additional 10 percent on average. Less popular models with fewer bells and whistles tend to depreciate more than popular models with additional features, sometimes loosing 50 percent of their value in many cases. Typically, new cars lose value for four years after the first year after purchase, ranging from 15-25 percent per year. All told, new cars tend to lose 60 percent of their original value by the fifth year after purchase. Purchasing a relatively new used car will avoid the first-year rapid depreciation, but even used cars depreciate over the first five years after purchase.

Obviously, there are many factors that determine how much any one particular car will depreciate over a given period of time. If you are buying a used car in Salt Lake City you may want to use a car depreciation calculators available on the internet. These calculators may help you to decide whether one car is a better purchase than another.