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Car insurance is a type of contract between a car owner and an auto insurance company that protects the car owner against any financial loss that may result from an accident, vehicle theft or a natural disaster.
In this type of contract, the car owner pays a monthly fee, also known as an insurance premium to the auto insurance company. In return, the insurance company will step in to help the car owner financially during the unfortunate event of an accident or theft.
Are you planning to get auto insurance? If you are, below is the essential information that you ought to know.
Why should you have car insurance?
In most states around the world, auto insurance is mandatory for any vehicle owner. For this reason, the auto insurance will save you from hefty fines, vehicle impoundment, license suspension, and conviction.
Besides being a legal requirement, auto insurance also protects you from losses that may result while using your car. For instance, car insurance will cater for your medical expenses and that of passengers during an accident, it will cater for the damages that result on your car and people’s property, and it may cater for legal liabilities during an accident.
1. Liability Insurance
The liability vehicle insurance covers you against various losses that may occur when you are responsible for an accident. As such, this type of coverage will cater for the expenses of repairing damaged property as well as the medical expenses of passengers or pedestrians involved in an accident.
2. Collision Coverage
Collision coverage protects you against the expense of repairing your car after an accident. Moreover, this type of coverage will pay for the value of your vehicle just in case it is totaled during an accident.
3. Comprehensive Coverage
Unlike most types of coverage that protect you in the event of a road accident, this type protects you against car theft, fire accidents and other unfortunate events that are not necessarily related to a traffic accident. This kind of coverage is not necessary, but it can be essential if you stay in places where car crimes are rampant.
4. Personal Injury Protection
Personal injury protection, abbreviated as PIP, is a type of coverage that takes care of your medical bills and those of your passengers regardless of who was at fault during an accident. In some cases, the personal injury protection may cover car owners against lost wages and transportation expenses to a medical facility.
5. Uninsured/ Underinsured Motorist Protection
Despite the fact that it is mandatory for every driver to get insured, it is not always case. On the other hand, some drivers take the low minimum coverage that may not be sufficient enough to cater for the entire expenses during an accident. For this reason, the uninsured or underinsured motorist protection coverage protects you against bodily injury and or property damage just in case the at-fault driver’s auto insurance is not able to cater for the expenses.
Understanding the Different Types of Car Insurance
With so many different choices for car insurance, it can become quite overwhelming choosing the right one. Many people will ultimately decide between liability and collision car insurance, but even still, some people never know what type of car insurance they have. Unfortunately, by the time they realize what type they have, they are involved in an accident and realize that they thought they had a different type of insurance. Car insurance can be expensive in some cases, especially when there are teenagers involved or individuals with bad driving habits. Fortunately, the tips listed below will allow you to get a better understanding of the different types of car insurance, and it will allow you to find the type that works best for your situation.
Many people choose to get liability coverage because it is the cheapest type of coverage. Also, since states require that people have at least liability coverage on their vehicles, it makes this type of coverage popular. The downside of liability coverage is that it will not cover the damages associated with the policy holder’s vehicle. It will only cover damage to the other vehicle. This coverage is great for individuals who have an older car or individuals who are on a budget.
Collision car insurance coverage is a second type of insurance that many drivers have. This type of insurance is great for individuals who are still paying a car loan. As a matter of fact, many states require individuals to have collision coverage if they are still paying a car loan. Collision car insurance coverage is an upgrade to liability. The policy holder will have his or her vehicle’s damage covered with collision insurance.
The most expensive type of car insurance is comprehensive. This insurance covers a wide array of options for the policy holder, thus creating the expensive costs. Not only does this type of car insurance cover the policy holder, passengers, and other drivers, but it also covers the car against vandalism, theft or natural disasters. Not all vehicles will benefit from comprehensive insurance. If the vehicle is old and not worth much, it will not be in the person’s best interest to have comprehensive insurance.
Insurance is a necessity for everyone, but with so many different types, it is difficult figuring out what is best for you. The main goal should be to assess your situation and determine what will be needed if you are in accident. Additionally, you will want to determine how much you can afford each month, and you will want to determine how much you can afford in terms of a deductible. By making these determinations, you will find the insurance that is best suited for you and your needs.