A Comprehensive Guide to Car Insurance

Introduction

You might have a new car and you want to make sure it is protected. Or, maybe you’ve decided now is the time to stop paying for fender-benders. Either way, car insurance will save you a chunk of change and give you a future without any headaches. You will be able to protect yourself, your family, and your car. All you have to do is buy a car insurance policy and be on your way.

Before you do that, you should know what car insurance is and how it works. Additionally, you should know the different types of car insurance before you choose a policy. This article will be an extensive guide to car insurance and all things car insurance-related.

What is Car Insurance?

According to Investopedia, “car insurance is effectively a contract between yourself and an insurance company in which you agree to pay premiums in exchange for protection against financial losses stemming from an accident or other damage to the vehicle1. Auto insurance can offer coverage for:

  •  Vehicle damages, including your car or another driver’s vehicle
  • Property damage or bodily injuries caused by an accident
  •  Medical bills and/or funeral expenses associated with injuries sustained in an accident” (Kagan)

Simply put, car insurance is an agreement between you and an insurance company about your car. You pay an amount of money and the insurance agency helps pay for any damages on your car.

How Does Car Insurance Work

To receive any benefits from a car insurance policy, you will need to pay a premium. The insurance company will, in turn, help pay for any damage to your car, per your car insurance policy. You can customize your policy to fit exactly what you need and your current financial situation. Additionally, you will find that each policy is priced individually, since there is no one-size-fits-all policy. Typically, car insurance policies are offered in the duration of six or twelve months. Also, you can renew your policy after your policy term expires.  (Do not worry, you do not add it to your calendar. An insurance agent will let you know when it is time for your policy renewal.)

What are the Different Types of Car Insurance?

There are six types of car insurance coverage that you’ll need to consider but you will not need every single one of them. While you are picking car insurance coverage, you should think about what advantages will help you the most. It is a hard thing to think about, since accidents are quite often a shock that you never see coming. Be that as it may, you should take some time to consider before you choose which car insurance coverage will help you. The six types of car insurance coverage are the following: liability coverage, uninsured and underinsured motorist coverage, comprehensive coverage, collision coverage, personal injury coverage, and medical payment coverage.

Liability

You will see that car insurance coverage, specifically liability, is required in many states and you are committed to purchase the bare minimum of liability coverage, in case of any accident that might take place. With car liability coverage, there are two parts: injury risk and property harm. Injury risk will help you pay for expenses of someone else’s injuries for the accident that you caused. With property harm responsibility, it will assist you with paying for damage that you caused on a person’s property, if you were driving. Basically, liability coverage helps others, on the off chance that you caused an accident. This way, in the event that any mishap happens and you hurt somebody or harmed somebody’s property, your car insurance coverage will pay for the expenses.

Comprehensive

Comprehensive car insurance coverage is a type of protection that pays for any harm to your car that was not brought about by an accident. You will see that comprehensive car insurance coverage helps pay for any damage from theft, vandalism, fallen objects, fires, and natural disasters. Furthermore any unsettling civil disturbances or wild animal assaults on your car are covered with comprehensive car insurance coverage. In any case, there are parts that are not covered by comprehensive car insurance coverage. Comprehensive car insurance coverage does not cover: damage from a crash to your car or another person’s vehicle and your medical expenses after a crash. (Relax, the collision coverage covers those costs, so you are safe.)

Collision

Allow us to say that you were associated with a car accident with another vehicle. If that happens, your collision car insurance coverage will help pay to fix your car. (At times, your collision car insurance coverage will help pay for the replacement of your vehicle, as well.) You should remember that your collision car insurance coverage is generally an optional policy. Collision car insurance coverage helps pay for any damage from another vehicle, damage from an object, and any harms from a single-car accident. In any case, collision car insurance coverage does not cover damage to your vehicle or someone else’s vehicle on any component that is not classified as a collision.

Uninsured Motorist and Under-insured Motorist

This kind of coverage is meant to generally shield you from other drivers when they mess up. You are a good citizen, since you have collision coverage, yet imagine a scenario in which the other driver does not. (There is a problem that you never thought of.) You will be left with covering your own hospital expenses and it will be coming out of your own pocket. That is just wrong. (You didn’t pay your way to a car insurance policy and ended up paying for it because the other driver did not do the right thing.) If the other driver who caused the car accident does not have insurance or enough insurance, then, at that point, your uninsured and under-insured motorist coverage will take care of the expenses.

Personal Injury Protection

Personal Injury Protection is the last type of car insurance coverage and it is not accessible in every state. This kind of car insurance coverage will help pay for your medical expenses after an accident, but there is more to it than that. On the off chance that you have injuries from an accident that deny you from working, then, at that point, Personal Injury Protection coverage will help you. At times, you will see that this sort of car insurance coverage will pay for children care or repay you for lost wages. Notwithstanding, personal injury protection can be limited, since certain states do not have this type of car insurance coverage to accommodate drivers.

What Does Car Insurance Not Cover?

Car insurance coverage is fundamental and they provide assistance in the most well-known circumstances that could cause damage to your car. This could include: accidents or theft. Be that as it may, even the best car insurance coverage will not cover the damage of your car from everything. You should make sure of all the things your car insurance coverage does not cover.

Each car insurance agency has a set of coverage option, but most agencies do not cover the following:

  • Someone else driving your car and caused damages
  •  Damages that surpass your liability car insurance coverage
  • Exotic cars or vintage cars
  • Routine maintenance and repairs

What Are The Factors That Could Influence Your Rate?

As mentioned above, you can customize your car insurance policy. Typically, it is priced individually. However, there are many factors that could affect your car insurance rate. This includes:

  •  How Old You Are
  • Age of Your Car
  • City and State That You Live In
  • Your Claims History
  • Credit Score
  • Your Gender
  • How Much You Drive or Mileage
  • Your Marital Status
  • The Safety Features in Your Car
  • Type of Car

Who Needs Car Insurance, And How Much Do You Need?

There are forty-eight states that need you to purchase liability coverage; it is mandatory in the United States except for two states. New Hampshire and Virginia are the two states that do not legally obligate you to buy liability coverage. If you live in a state that has extreme weather conditions, then you should consider comprehensive coverage. Additionally, if you do not have car insurance, then you will need to pay an uninsured coverage fee, in the case of an accident. If you never really worked on your car and its repairs, you should know that roadside assistance is covered in your car insurance policy.

4 Tips You Should Try Before Buying Car Insurance

There are four tips that you should try before buying a car insurance policy. It will not hurt for you to stay on the safe side, especially since most annual premiums are quite expensive. So, you should keep these things in mind, moving forward.

Make Sure To Look Around at Multiple Insurance Agencies

Have you ever heard of the saying, never put all of your eggs in one basket? Well, the same applies to car insurance policies. You should make sure to take a look around and explore your options. There are many car insurance agencies that could offer you different coverage options. You should look for an insurance agency that will help improve your current financial situation and give you all the benefits you will need for your car. This is why we suggest that you look through different car insurance policies and request quotes from multiple agencies.

Keep An Eye Out for Scams and Red Flags

It is an age-old issue, but you might find a scam or two in your hunt for a car insurance policy. There might be policies that are tempting to buy. Because of its price or its coverage options, you never know where they hide. You should look for an expert’s opinion when it comes to a shady car insurance policy. If your gut feeling tells you that you should not buy a particular policy, then listen to it. (The alternative is much worse.) Avoid buying car insurance policies from door-to-door salesmen or telling other agencies about your current policy premium. (Coverage)

Choose a Car Insurance Policy That Will Benefit You The Most

There might be many car insurance policies that look like they will cover your every need. But, not everything is what they seem. Make sure you remain as objective and realistic as possible when you are choosing a car insurance policy. Refrain from buying a car insurance policy that you cannot afford or just won’t use. If you live in a bad neighbourhood, then you should consider comprehensive coverage. But, if you are sure that kids won’t vandalize your car, then you can skip out on that coverage option.

Read The Fine Print, Every Time

When you receive your car insurance policy, an insurance ID comes with the fine print. This is your way of confirming that you have insurance. However, make sure to read your policy backwards and forwards. It is rare to find a mistake in the fine print, but it does happen. This is why you should make sure that your policy covers all the components you requested from your car insurance agency.

Conclusion

In conclusion, you should consider buying car insurance. There are many coverage options that you will benefit from a car insurance policy. If you get into a car accident or someone stole your car, then there are car insurance coverage options to help you. You might also need it for extreme weather conditions or natural disasters. Additionally, you should know that forty eight states require a liability coverage policy for all drivers. (Virginia and New Hampshire are the exceptions. But, even they strongly urge you to buy car insurance.) Car insurance is a safety measure for yourself, your family, and your car. (What could go wrong?)

Works Cited

Coverage. Auto Insurance Guide. 2021. 26 09 2021 <https://www.coverage.com/insurance/auto/guide/>.

Kagan, Julia. Auto Insurance. 03 05 2021. 26 09 2021 <https://www.investopedia.com/terms/a/auto-insurance.asp>.

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