Over the years, we’ve gathered much experience and knowledge about auto insurance policies. On this page, we will share some helpful information that’s easy to navigate. We will advise you on finding the right policy and handling your vehicle daily, along with prevention and treatments. Getting insurance is an important decision that will affect you in the long term and shouldn’t be taken lightly. If you get stuck with a poor insurance plan, you must pay premiums for something you don’t need. This is why getting informed as much as possible and understanding all the factors involved are essential.
How Auto Insurance Works
Like with any other insurance, the basics are pretty simple to understand. You pay premiums to an insurance company for your policy, which protects your vehicle in case of damages and covers the expense of repairs or replacement. Auto insurance policies also cover your physical injuries and will pay for all treatment expenses until you’re back healthy before the car accident. In theory, this all sounds straightforward, but it isn’t always.
In practice, there are a lot of factors that need to be considered when getting insurance. At the same time, insurance companies constantly thoroughly assess the market value of your vehicle or the actual costs of your medical bills. In most cases, you don’t know how reliable an insurance company is until you make a claim.
Why Buy Auto Insurance?
Insurance companies give out auto policies because most people won’t get into car accidents. When you get auto insurance, you are getting financial protection for when your vehicle is in an accident. The insurance can also cover recovery expenses if someone gets injured by your fault. When you are found liable for an accident, and other people have been injured, you might be obligated to pay for property damages, pain & suffering, wages lost, and medical expenses. This can all pile up to a serious amount of money.
Without insurance, you might lose much money, savings, property, etc. However, you won’t have to make these payments with auto liability insurance. Some insurance policies also cover legal expenses if you need a lawyer to defend you in court. Auto insurance can help you save money and make your life easier. At the same time, you can protect yourself in case of any legal claims. There are two main types of auto insurance coverage:
- Liability coverage
- Vehicle damage coverage
Here are the five most important reasons why you should get one:
1. Protecting Your Finances
If you get in a car accident, there is a chance that you will have to pay for most of the costs in case you are responsible. These costs include car vehicle damages, lost income, medical expenses, and legal fees. If you have liability coverage, this insurance will cover these costs. If not, you must find money to pay for these expenses as soon as possible.
2. Protecting Your Well-Being
Many people still drive without liability coverage even though many countries have made it mandatory. With uninsured motorist coverage, you will be covered for any medical bills if you get in an accident with a driver without insurance. Some countries make this coverage mandatory, while it remains optional in others. Getting the right auto insurance for your needs can protect you in many ways. Not only will you be able to secure yourself legally, but you will also ensure that you can permanently repair your vehicle and pay all medical bills.
3. Protecting Others in Your Vehicle
Personal injury and medical payment coverage can cover your medical bills in case of an accident. However, these coverages will also cover the medical expenses of any passengers in your vehicle when the accident happened. These coverages will pay for surgeries, doctor bills, medication, hospital visits, etc.
4. Complying With The Law
Almost every country has a minimum car liability coverage limit set for all drivers obligated to have it. This limit is, in fact, the maximum payment an insurance company will make in case of a covered event. However, nobody forces you to stay within this limit as you can exceed the current requirements. If not, you might have to pay out of pocket if the accident exceeds your current coverage in terms of value. This is the most common coverage that is required by law. However, some states also require personal injury protection for uninsured motorists.
5. Securing Your Vehicle
Owning a vehicle alone won’t help you protect it adequately. You will need an insurance policy to maintain your vehicle in the best condition possible. For example, what if a storm occurs and your vehicle gets damaged? On the other hand, having more comprehensive auto insurance can ensure your vehicle is covered for damage caused by other factors, including accidents, fires, thefts, and so on. Instead of paying out of your pocket, your insurance can cover all of the bills, and you won’t have to worry about them.
Auto Insurance Components
Auto insurance policies come with various components, including optional and mandatory coverage. However, the best formula is to find a policy with three essential coverages:
- Property damage liability insurance
- Uninsured motorist coverage
- Personal injury liability insurance
Other optional coverages are comprehensive, collision, medical expenses, and underinsured motorist coverage.
Auto Insurance Mandatory Components (Liability Coverage)
Even though auto insurance policies have evolved and changed a lot over time, all drivers are still obligated to have liability insurance in the US. The DMV has made this component mandatory, and anyone driving a motor vehicle without it will have to face legal consequences. This coverage comes with two main components:
- Property damage liability: this coverage pays for all the damages you cause to someone else’s property while driving your vehicle.
- Bodily injury liability: If you cause an accident and someone else is hurt due to the consequences, this coverage will pay for their injuries and medical bills.
Underinsured & Uninsured Motorists
If you get into an accident due to another driver’s fault, and they don’t have any insurance, uninsured motorist coverage covers all your medical bills. In some countries, this coverage also pays for any car damages that have occurred. On the other hand, if the person who causes the accident is underinsured (they have coverage, but it won’t cover all the expenses of the accident), this is where underinsured motorist coverage helps. Both of these coverages are usually optional, but some countries require them.
Personal Injury Coverage or Protection
This kind of coverage is available only in some countries. It pays for medical expenses that were generated due to an accident. Additionally, this component also covers expenses that were further generated by sustained injuries. For example, if you could not care for your kid at home and had to pay for a nanny while recovering, this component will cover these expenses.
Comprehensive Insurance
This kind of coverage protects our vehicles from various damages, not just accidents. It covers things like vandalism, fires, thefts, and so on. When your vehicle gets damaged by a factor covered by this insurance, it will cover all the repair costs and even replace the car if it can’t be repaired. Comprehensive coverages come with a deductible – an amount you will have to pay on your own before you get reimbursed for your claim. In most cases, this kind of coverage is optional, but it might be required by the insurer when your vehicle is being paid off or leased. Some other auto insurance components include:
- Traditional car insurance
- Medical payments coverage
- Collision coverage
- Transportation/rental reimbursement coverage
- Car replacement coverage
- And so on
Best Auto Insurance Companies
- Allstate – perfect for new car purchase
- Liberty Mutual Auto Insurance Review – bundle discount
- Esurance – transparency
- USAA – best for war veterans, military members, and their families
Final Word
When shopping for auto insurance, take your time and thoroughly analyze policies before signing the contract. As we mentioned earlier, this is an important decision, and you don’t want to end up with a bad contract. Compare different policies and choose the one that suits you the most.