Last Updated on: 14th January 2023, 04:50 am
In This article we will know about, What Is Car Insurance? You may have heard the term car insurance before, but you may not know exactly what it means or why you need it.
Simply, car insurance is a contract between you and your insurance company that states that they will pay to repair or replace your vehicle if it gets damaged in an accident, or stolen, or if you are at fault, in an accident and cause damage to another driver’s vehicle or property.
Most of the terms like types of insurance, liability insurance, comprehensive insurance or many more are discussed below…
Understanding car insurance
- Auto insurance covers you, your passengers and others on or near your car. Some of what’s covered by auto insurance is mandated by state law; other parts are simply up to you.
- Auto insurance protects you from lawsuits and helps pay for injuries to you and your passengers in a crash, as well as damage to your car.
- State laws require that drivers carry specific amounts of liability insurance: a minimum of $20,000 per person up to $40,000 per accident for bodily injury liability; and a minimum of $10,000 per accident for property damage liability.
- Liability coverage pays regardless of who was at fault in an accident; it’s how most drivers protect themselves against lawsuits resulting from accidents they cause.
Types of car insurance
- There are several different types of auto insurance, and it’s important to make sure you are protected.
- The three main types of car insurance include liability, collision and comprehensive.
- Liability auto insurance protects you from injuries or damage you cause to another person’s property or person.
- Collision insurance covers repairs to your vehicle if it collides with an object or other vehicle.
- Comprehensive auto insurance covers other damages to your vehicle in which there was no collision, including vandalism and theft, as well as weather-related incidents like hail storms.
- All three coverages can be purchased together in one package (called a policy) through your state’s department of motor vehicles.
- Below we Provide Details..
- This covers you if you injure someone or damage their property, and they decide to sue.
- It also covers you if your negligence causes a collision that injures or kills a third party.
- State laws vary on whether an injured person must sue you before insurance will cover their expenses like, Medical payments coverage.
- This is an extension of your liability policy that pays for injuries sustained by those in your car (assuming, of course, that you’re not at fault).
- It does not pay to repair or replace damaged vehicles.
- Liability insurance covers damage you cause to other people, their property, or another driver’s car.
- This is often referred to as a 3rd party policy because it covers your liability for accidents that are not your fault.
- For example, if you get into an accident with someone else, your liability insurance will cover damages like medical expenses, lost wages and any physical injury they suffer while in your car (but only if they were properly wearing their seatbelt at all times).
- If you are found guilty of violating traffic laws and causing an accident, then not only will your liability coverage apply – but so will any other endorsements that apply under your insurance plan.
- Collision coverage pays for damages to your car if you hit another vehicle or an object like a tree or a light pole.
- Without collision coverage, you would have to pay for repairs out of your own pocket.
- This can be very expensive; it is much cheaper to pay for collision insurance through your auto insurance company.
- If you opt not to buy it, you could end up paying a lot more when you have an accident.
- If you are at fault in an accident, or if your car is damaged, collision insurance will cover those costs. Typically, you don’t have to pay for repair.
- collision insurance just takes care of it for you.
- Collision also covers theft and vandalism, (minus a deductible). Since it can sometimes be hard to determine who is at fault for an accident—you, another driver or a pedestrian—collision also covers injuries that might occur in an accident as well as damage to other cars.
- Your comprehensive auto insurance policy will cover you in case your car is stolen or damaged by something other than a collision.
- There are several different types of coverage that fall under comprehensive, so if your specific situation isn’t listed here, it may still be covered.
- Examples include: fire and theft, glass breakage, vandalism and acts of nature (such as floods).
- Comprehensive coverage is an optional auto insurance policy provision that covers damage to your car caused by external events (other than a collision), such as fire, theft, vandalism or natural disasters.
- In most states, comprehensive insurance is optional.
- All else being equal, you will pay less for your auto insurance if you choose not to carry comprehensive coverage.
- Comprehensive insurance can be extremely valuable if you own an expensive car or have a family to support, because it ensures that you’ll always have a way to get to work in case of emergency.
Which type do you need?
- If you own a car, then it’s likely that you have car insurance.
- Even if you don’t drive much, or even at all, it’s still important to understand how auto insurance works and what type is best for your needs.
- Whether you choose to purchase coverage through an agency, or get your coverage through a broker, there are five main types of auto insurance.
- comprehensive and collision insurance (bodily injury and property damage), liability insurance (property damage only), medical payments/personal injury protection (often known as PIP) , uninsured motorist coverage insurance (UM) and underinsured motorist coverage (UIM).
- Your agent will help you figure out which policy is right for your vehicle.
How to get your best deal on car insurance
- Driving without insurance is dangerous to you and others on the road, but it’s also a crime in most states.
- A police officer will pull you over and give you a ticket ( Like Fine) if you don’t have insurance, or your current policy will be invalidated if your insurer finds out (and they will find out).
- Make sure that you fully understand your car insurance needs before shopping for coverage—that way, you won’t end up paying more than necessary for things like add-ons, upgrades and other add-ons.
- It’s common sense: there are very few true car insurance needs; companies earn their money from covering items that should be included in a comprehensive policy for free.
Q:- How Many Types Of Car Insurance?
There are three main types of car insurance include liability, collision and comprehensive.
- When you’re looking to buy car insurance, there are a lot of factors you need to consider.
- No one plan will meet all your needs, so be sure to do your research and compare quotes.
- Remember, also, that companies can differ in how they handle claims and deductibles (how much you pay out-of-pocket before they begin paying).
- Also be aware that more coverage isn’t always better—you want enough coverage to protect your assets but no more than that.
- Always remember: buying insurance is just like buying anything else—you get what you pay for. If a plan seems too good to be true, it probably is!