When you buy or lease a car, it’s important to have adequate insurance coverage.
Getting auto insurance can help ensure that you are protected from liability and other expenses if your car is stolen or damaged by a natural disaster.
Instead of paying for car repairs and medical bills after an accident, people pay a yearly fee to their insurance company. The insurance company then pays most of the costs associated with an auto accident or other vehicle damage.
What is ‘Auto Insurance?
Explanation: Auto insurance provides coverage for damage or loss to any vehicle—cars, motorcycles, or even trucks.
This insurance covers the cost of repairs if an accident damages your car.
The amount charged by an insurance company for insuring a vehicle varies depending on the type, value and condition of the car being insured.
» MORE : 10 Largest Online Auto Insurance
Auto Insurance Costs
There are two main components of car insurance: premiums and deductibles.
Auto insurance premiums vary depending on the driver’s age, gender, years of driving experience and accident history.
In most states, a minimum amount of car insurance is required. However, many drivers choose to purchase additional coverage in case they cause an accident or are injured themselves.
If you’re financing a car loan, your lender may require certain types of auto insurance before letting you take possession of the vehicle
For example, you may want to purchase gap insurance if you’re buying an expensive car that will likely lose a significant amount of its value after being driven off the lot. Gap insurance can help pay down what you still owe on your vehicle in case it’s destroyed by accident or theft for only slightly more than the price
If you have a poor driving record or want full coverage, your rates will be higher. However, you can reduce premiums by agreeing to take on more risk: increasing your deductible reduces the amount of insurance that is used!
Your deductible is the amount of money you must pay (out-of-pocket) before an insurance company begins to cover any expenses related to a claim. For example, your policy might have a $500 or $1000 deductible.
If you agree to pay a higher deductible, your premiums may decrease but only if you’re sure that the larger expense won’t be difficult for you to cover.
» MORE : Best Cheap Car Insurance of the Year
How Auto Insurance Works
When you pay a premium, the insurance company agrees to cover losses up to an amount specified in your policy. Policies are priced individually so that you can pick one whose limits match your needs and budget; most policies have terms of six or 12 months and can be renewed if desired.
When a customer’s policy is about to expire, the insurer will notify him or her.
Whether or not your state requires it, you should buy enough auto insurance to cover the cost of any injuries or deaths that result from accidents in which you are involved.
Property damage liability covers any property damage you or another driver may cause to someone else’s vehicle, house or other personal belongings while operating your car.
Not all states require car insurance, but many do—and those that don’t will make sure you have medical payments or personal injury protection. This type of coverage reimburses medical expenses for injuries sustained by your passengers as well as lost wages and other related costs.
If you are involved in an accident with a driver who has few assets to pay damages, underinsured motorist coverage can be used to cover costs not covered by the other party’s insurance. Uninsured motorist coverage reimburses you when an accident is caused by a driver will no auto insurance at all.
What Is Covered Under Auto Insurance Coverage?
If you have an auto insurance policy, it will cover you and other family members who are driving your car. The policy also covers someone else who is not on the policy and driving your car with your consent, provided that person does not cause any damage or injury to third parties while using the vehicle.
Personal auto insurance does not cover commercial driving; nor will it provide coverage if you use your car for ride-sharing services.
Some insurance companies are now offering supplemental policies that cover drivers who provide ride-sharing services.
It’s important to have insurance of any kind, but auto insurance is especially crucial. It can save you money and headaches down the line if a bad accident occurs.
Remember to compare shops for car insurance so that you can find the coverage and price that’s right for you.