Basic personal car insurance offers some financial protection in case you or another driver using your car causes a wreck that injures someone, damages their vehicle or property, or both.
All states, save for one, mandate drivers to have some form of car insurance cover. To that regard, some drivers only get insurance to abide by the law but have no clue what their policies involve.
Although you do not need to be an expert on the subject matter, understanding the basics of an auto insurance policy is a great way to get the most value out of it. In this article, we’ll highlight some of the nuances of car insurance policies to help point you in the right direction.
Car insurance and its importance
Auto liability policies can be costly, but states mandate it for a reason. In the event of an accident, insurance can save you from falling into a financial crisis. Statistics reveal that there were 6,264,000 car accidents in the United States in 2015. The accidents led to 35,092 deaths, 4,548,000 property damage and 2,443,000 injuries. These numbers represent the total driving experience of 210 million licensed drivers in the country. Going by the statistics, you have a 3% chance of getting into some accident in any given year.
Of course, the 3% chance seems negligible. However, if you are involved in a wreck, but lack an insurance cover, the results can be overwhelming, to say the least – not to mention the financial obligation that comes with it. That’s why you cannot afford not to have car insurance. If you are concerned about the cost, comparing car insurance quotes can help you narrow down to the best offer.
Here’s why you need insurance cover:
- To compensate you for a wreck resulting from someone else’s negligence or careless acts
- To allow you to pay someone else for a crash caused by you
- To have your vehicle repaired irrespective of who caused the accident
- To protect your car lender or leaser
- To protect your assets
- To oblige with the law
Types of insurance coverage
This is the type of insurance that states mandates vehicle owners or drivers to carry. It covers another driver’s costs in case you are to blame for the accident. Basic liability cover serves as financial protection for others. If you are at fault, it will take care of property damage as well as bodily injury. So, if you are involved in a minor crash, which results in the other driver twisting their hand or leg, this cover will take care of the repairs along with the medical expenses to have their leg or arm checked.
Note that every state has its minimum cap for liability insurance – and it’s mandatory to carry this minimum. However, for your protection, it’s best to get an additional premium. This way, you won’t have to spend any money out of pocket in case of an accident.
This insurance covers fixing or replacing cars that have been damaged by any other thing save for an accident with another vehicle. Think about a tree branch falling on your car or vandalism from a rogue individual. Unlike liability insurance that covers medical expenses for injured victims and their damaged properties, comprehensive insurance typically covers your damage arising from falling objects, vandalism, and fire. If you are leasing or financing your car, your lender may need comprehensive coverage. Otherwise, it’s an optional coverage on your policy.
This cover pays for repairs or replacement of your vehicle if it’s damaged in an accident with an object or another car. Like the comprehensive cover, you will need a collision policy if you are leasing or financing your vehicle. Otherwise, it is optional. Collision coverage does not take care of damages that aren’t related to driving, damages to another person’s car, or any medical costs.
Personal injury protection
Commonly referred to as PIP, this type of cover is required in certain states. It pays for your medical expenses as well as any other person who was in the car at the time of the accident, irrespective of fault.
Other types of car insurance
In addition to the insurance coverage mentioned above, you can also get medical payments coverage, flood insurance, uninsured motorist coverage, mechanical breakdown insurance, gap insurance, and so on. Talk to your insurer today to see which ones match your needs.