Auto Insurance 101
By Chris Tolamalu, Thu Dec 8th

Auto insurance, as the term suggests, is insurance that you canpurchase for your vehicle (cars, trucks, SUVs, motorcycles,etc.). It provides protection against losses incurred as aresult of vehicle accidents. While the product seems simple,there are many different types of auto insurance policiesavailable for purchase. Depending on the policy that you choose,your coverage levels and types will vary. Broadly speaking,these are the types of auto insurance programs on the markettoday:

Coverage:

*'Comprehensive coverage' (Comp) - This kind of insuranceinsures your vehicle against the cost of purchasing a newvehicle if it is stolen or destroyed in a fire.

*'Collision coverage' (Coll) - This kind of insurance insuresyour vehicle against the cost of repairing the vehicle followingan accident or the cost of purchasing a new vehicle if it isdamaged in an accident beyond economic repair.

Protection:

*Personal Injury Protection (PIP) - This insures against thecost of medical expenses and lost wages related to the use,ownership or maintenance of a motor vehicle. This insurance ismandatory in some U.S. states.

*Medical Payments (MP) - insures against the cost of medicalexpenses for bodily injury sustained in an accident beyond anyexpenses that may be covered by PIP.

*Legal liability claims against the driver or owner of thevehicle following the vehicle causing damage or injury to athird party.

While 'Liability insurance' covers only legal liability,'comprehensive insurance' covers PIP, MP, as well as legalliability. In the United States, liability insurance coversclaims against the policyholder and any other operator of theinsured's vehicle. If, however, any other operators live at thesame address, they must specifically be covered on the policy.For rented vehicles, most rental car companies offer insuranceto cover damage to the rental vehicle.

While comprehensive insurance covers most aspects of damagewhich can affect the car itself or the driver, there is one riskassociated with buying a new car is not covered even bycomprehensive insurance - once the

Reliance Capital to set up Islamic fund management co in Malaysia
The Anil Ambani group-controlled Reliance Capital Asset Management Ltd (RCAML) said on Friday that it will establish an international Islamic fund management company in Malaysia.
Reliance Capital to launch Islamic funds in Malaysia
Reliance Capital Ltd has received approval to set up an asset management company in Malaysia.
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Religare ties-up with Karur Vysya for equity trading services
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IDBI in talks to buy 25% stake in GE arm
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SKS Microfinance mops up Rs 366 cr
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Indian finance cos cut disbursement by half: CRISIL
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Reliance Consumer Finance stops fresh loans
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ICICI Securities opens Oman branch
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Religare board approves proposal to acquire Lotus AMC
Integrated financial services group Religare Enterprises on Tuesday said it will acquire Lotus India Asset Management Company for an undisclosed amount.
LIC pumps in Rs 15,000 cr into NCDs of big cos
Life Insurance Corporation (LIC) has come to the rescue of corporates scrambling to raise funds.
Bharti, AXA plan PE fund
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Unrated companies face loan heat
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IBA opens a new front to back MFs & NBFCs
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Citi repositions India businesses to reduce costs
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IDFC eyes 35% in GE?s construction equipment biz
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IDBI Bank on the look out for potential buyers for IHFL
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Citigroup on way to rejig India biz to cut costs
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Tata Motors to rethink on foreign fund raising: Exec
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Cabinet nod for UCO bank cap change
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JP Morgan invests USD 450-mn of USD 1-bn fund across sectors
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PE firms prefer to play safe in Indian markets
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PE firms witnessed a significant dip
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Credit-deposit ratio shoots up to 238%
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Federal Bank to enter wealth management
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Banks demand cos' assets as collateral to fund buyouts
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Kuwait's Global Investment buys 11% in MAPE
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Fullerton gets $50 mn boost from parent co
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ICRA assigns iAAA rating to SBI Life Insurance
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PE inflow to suffer in short term; long term looks bright
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Capital adequacy ratio of commercial banks rises to 13%
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Morgan plans India-specific alliance with Mitsubishi
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VC investments in Q2 up 15% to $290 mn
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Merrill raises $2.6 bn for Asian realty fund
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DBS says Indian JV to close branches, layoff staff
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Reliance Money to buy 15% in HKMEx
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Geojit Financial to form JV in Oman
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PEs clock $3 bn in Q2, take 29% hit from corresponding quarter last year
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DSP Merrill Lynch beefs up i-banking team
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BNP likely to decide on Fortis' India biz by Jan: Report
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PE deals in realty space may lose steam
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Charles River Ventures to launch $150-m India fund
Charles River Ventures (CRV), the US-headquartered pedigree venture capital firm managing assets around $2.1 billion, is in the midst of launching $150 million India fund.
PE firms face a realty check during market meltdown
The average size of private equity deals in real estate has come down by an annual 60% to Rs 190 crore as the deteriorating market conditions have forced investors to take smaller exposures.
RBI imposes Rs 5-lakh penalty on Baramati Sahakari Bank
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Equitas to raise 10 bn rupees via debt, equity
Start-up firm Equitas Micro Finance India (P) Ltd plans to raise close to 10 billion rupees through a mix of equity and debt to help expand its micro-lending business.
Allahabad Bank eyes 20 per cent loan growth
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Rs.43.11 bn interest for banks on waived off farm loan
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NABARD to provide micro financial services to 50mn families
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Brics sues Lehman for recovery of sale amount
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Crisis-hit US institutions plan to sell off assets in India
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Reliance Money gets nod to acquire 10 pc stake in NMCE
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Reliance Money ventures into investment banking
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Banks ask RBI to infuse cash into system
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IDFC PE invests Rs.4,000 million in Suzlon subsidiary
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Asset reconstruction business hots up as loan defaults rise
The downturn in the economy is attracting more players towards the market for bad loans.
Reliance ARC to buy Rs 250-cr of bad debt
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Lehman effect: Indian banks post Rs 410-crore MTM losses
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Deutsche Bank to buy 5% in BPL
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Regulator makes case for ?defined contribution? pension scheme
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'Local capital can help us tide over financial crisis'
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Religare gets SEBI's nod for mutual fund business
Financial services firm Religare Enterprises on Thursday said its joint venture firm Religare AEGON Asset Management Company has received SEBI's approval for entering into the mutual fund business in the country.
TCI has brought many cos to heel earlier too
The scheme was attacked by investor funds on grounds that it was skewed against minority shareholders.
RBI makes alternative arrangements for clearing cheques
Reserve Bank of India (RBI)office has made alternative arrangements for clearing cheques in few cities.
WB govt must sort out Singur issue for investments: Nooyi
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Wal-Mart says to open first India centre in 2009
Wal-Mart Store Inc will open its first cash-and-carry centre in India in 2009, the head of its India operations said on Wednesday.
Lehman deal to boost Nomura?s India operations
Nomura Group, which has struck a deal to acquire most of the Asian operations of the beleaguered US financial services firm Lehman Brothers, would result in the former consolidating its Indian operations.
Hit by defaults, foreign NBFCs shut branches
A majority of non-banking finance companies with foreign parentage, are moving aggressively to close down their branch networks.
Reliance Petroinvestments exits NBFC business
RIL group company Reliance Petroinvestments has exited the non-banking finance business.
India's Religare in tie-up with Bahrain bank
The Bank of Bahrain & Kuwait (BBK) has entered into an agreement with leading Indian financial group Religare to provide portfolio management services (PMS) to expatriate Indians in Bahrain and Kuwait.
PFC to wire up with PE firms to finance power plants
Major financial institutions and private equity firms such as Cornell Capital and Actis are likely to join hands with leading domestic power sector financing company Power Finance Corporation.
Trident bullish on India despite crisis in the US
Leading venture capital and private equity firm Trident Capital is confident of maintaining its investment tempo in India, although the US financial market goes through its worst crisis ever.
Future tense for Indus hospitality fund
Lehman Brothers? collapse has put a question mark over Future Group?s $200 million hospitality fund in which the failed US investment bank had invested $80-100 million.
Fed may find more firms at its door
With the $85 billion bailout of AIG, the world?s largest insurance company, the US government has spent $900 billion this year in taking over failing companies.
Private equities to go slow on investment
Private equity (PE) investments are set to slowdown in the wake of the global economic meltdown.
Structured products face heat now
As schemes near redemption, market players question the chances of HNI favourite structured products to deliver promised returns.
AEGON Religare Life opens 2 branches in Mumbai
AEGON Religare Life Insurance on Wednesday announced the opening of two new branches in the city.
Kotak says no direct exposure to Lehman, credit offtake slows
Private sector Kotak Mahindra Bank, today said it did not have any direct exposure with the collapsed financial services major Lehman Brothers but sees an impact on general sentiments following the crisis.
Rel Cap draws up expansion plans
Reliance Capital will more than triple its current employee base and invest Rs 2,000 crore in the insurance business.
Reliance Capital announces finance expansion plans
Financial services firm Reliance Capital announced Tuesday plans for a housing finance unit, despite tough market conditions.
R-Cap to invest Rs 2,000 cr in insurance biz in next 3-5 yrs
Reliance Capital will invest Rs 2,000 crore in its insurance business over the next three to five years.
Morgan eyes $ 5-bn asset-base from Indian Pvt banking business
Global financial services firm, Morgan Stanley, today announced the launch of its private wealth management services in four Indian metros.
HCL Tech looking at buying 3-4 captive carve-outs
HCL Technologies is the early stages of looking at taking over 3-4 captive assets in the financial services sector.

car is bought, there is asharp decline in its value. During this period (immediatelyafter a car is bought), in which the remaining car paymentsexceed the value of the vehicle and thus the compensation theinsurer will pay for a 'totaled' (destroyed, or written-off)vehicle, customers may consider purchasing 'GAP insurance'. GAPinsurance was established in the early 1980's to provideprotection to consumers based on buying and market trends.

About the author:Chris Tolamalu is interested in auto insurance.