What You Must Know About Auto Insurance
You know you need one when you get a car or you may even have one already. But what exactly do you know about your auto insurance? Are you well informed when it comes to liability coverage and do you know what other additions you can get? And do you even know why you need it? Here is a walk through the basics – the whys and the hows of auto insurance.
Why Do I Need Auto Insurance?
All fifty states in the United States require car owners to purchase auto insurance policies. As much as it is a requirement, you may also still ask why you need it, and what it can do for you. Basically, it protects you from financial loss caused by damage to properties or injuries to other people brought about by car accidents, natural disasters, vandalism and theft.
All states do require you to purchase the minimum type of auto insurance, which is liability coverage. However, there are optional coverages as well and some additional required ones (depending on the laws of your state). If you got your car through a loan or lease, your auto loan financier would also probably require you to purchase auto insurance coverage for the vehicle itself.
So, What’s The Basic?
All states require you to purchase the basic type of auto insurance, and this is Liability Coverage. This type of coverage covers all liabilities caused by auto accidents. Liability Coverage can be broken down into two, and these are:
1.Property Damage Liability – This covers the repair or replacement costs of vehicles of other people (or the other party in the accident). This also covers replacement and repair of other people’s property if they are damaged during a car accident.
2.Bodily Injury Liability – This and protects your assets by paying for medical bills when other people are injured in an auto accident.
This basic liability coverage also pays for any legal costs should you be sued because of a car accident.
While liability coverage is the basic type of auto insurance, it only pays for anything you are held liable for – which is basically what you need to pay in case you damage other property or injure someone else. Your losses, however are not covered – and if you are at fault, you may end up paying for your losses yourself. These types of coverages are optional, but they are popular items to purchase to make sure that you are fully covered.
1.Collision Coverage pays for any repair or replacement costs for your car when it is damaged in an accident.
2.Comprehensive Coverage protects you car from any other damaged caused by other incidents aside from auto accidents. These incidents include fire, flood, theft and vandalism.
3.Underinsured/Uninsured Motorist Coverage protects you against losses during accidents caused by drivers who have little or no coverage at all.
4.Personal Injury Protection/Medical Payments Coverage covers you for medical expenses and/or funeral expenses for those riding inside your vehicle during the accident. It also covers those who are listed in your policy, even if they ride another car or meet the accident as a pedestrian.
Will I always Be Covered?
While your insurance company (or the other party’s insurance company, if he is at fault) pays for most of the expenses, there are some things that you need to cover for yourself, and these are the deductibles, exclusions and costs that go above the limits of the policy.
What About My Premiums?
Your premiums depend on the type of coverage you get, and if you have any other add ons. Your age, your neighborhood/city/state, your car make and model and driving record are all important determinants of your auto insurance premiums. With these information, insurance companies can tell whether you are prone to auto accidents or damage, and if you are, your premiums will increase.
Where Do I Start?
Shopping around is always important for getting an affordable and great auto insurance policies. Comparing options and alternatives by getting quotes from each auto insurance provider is the best thing to do to find the best deal. Make sure that you take time to understand your auto insurance policy coverage, as well as do some background research on your insurance provider. Remember that auto insurance is very important, so skimping on it, or taking things too quickly is not a good option.