Over the years, we’ve gathered a lot of experience and knowledge about auto insurance policies. On this page, we are going to share some useful information that’s easy to navigate. We will give you advice on how to find the right policy and how to handle your vehicle on day to day basis along with prevention and treatments.
Getting insurance is an important decision that will affect you in the long-term, and it shouldn’t be taken lightly. If you get stuck with a poor insurance plan, you will have to pay premiums for something you don’t actually need.
This is why it’s important to get informed as much as possible and understand all the factors involved.
How Auto Insurance Works
Like with any other insurance, the basics are quite 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 you for your physical injuries and will pay for all treatment expenses until you’re back to your healthy state previous to the car accident. In theory, this all sounds pretty much straightforward and simple, 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 always thoroughly assess the market value of your vehicle or the real 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 relying on the fact that most people won’t get into car accidents. When you get the auto insurance, you are basically getting financial protection for when your vehicle is in some sort of accident.
If someone gets injured by your fault, the insurance can cover their recovery expenses as well.
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 a lot of money, savings, property, and so on. However, with auto liability insurance, you won’t have to make these payments. Additionally, some insurance policies also cover legal expenses in case you need a lawyer to defend you in a court of law.
Simply put, auto insurance can help you save a lot of money and make your life easier. At the same time, you will be able to protect yourself in case of any legal claims. Basically, there are two main types of auto insurance coverages:
- Liability coverage
- Vehicle damage coverage
Here are the 5 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. Some of these costs include car vehicle damages, lost income, medical expenses, and legal fees.
If you have liability coverage, this insurance will cover these kinds of costs. If not, you will have to find money to pay for all of these expenses as soon as possible.
2. Protecting Your Well-Being
A lot of people still drive without liability coverage even though a lot of countries have made it mandatory.
With uninsured motorist coverage, you will be covered for any medical bills in case you get in an accident with a driver that has no insurance. There are countries that make this coverage mandatory while it remains optional in others.
Getting the right auto insurance for your needs can protect you in many different ways. Not only will you be able to secure yourself legally, but you will ensure that you can always repair your vehicle and pay for all medical bills.
3. Protecting Others in Your Vehicle
Personal injury and medical payment coverage can both cover your bills for medical care in case of an accident. However, these coverages will also cover the medical expenses of any passengers that were in your vehicle when the accident happened.
These kinds of coverages will pay for surgeries, doctor bills, medication, hospital visits, and so on.
4. Complying With The Law
Almost every country has a minimum car liability coverage limit set for all drivers that are obligated to have it. This limit is, in fact, the maximum payment an insurance company will make in case if a covered event.
However, nobody is forcing you to stay within this limit as you can go beyond the current requirements.
If not, you might have to pay out of your pocket, if the whole accident goes over your current coverage in terms of value. This is the most common coverage that is required by law. However, there are states that also require personal injury protection or uninsured motorist.
5. Securing Your Vehicle
Owning a vehicle alone won’t help you protect it properly. You will need some sort of insurance policy to make sure you can maintain your vehicle in the best condition possible. For example, what if there is a storm 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 having to pay out of your pocket, your insurance can cover all of the bills, and you won’t have to worry about them.
Best Auto Insurance Companies
- Allstate – perfect for new car purchase
- Liberty Mutual – bundle discount. Related: Liberty Mutual Auto Insurance Review
- esurance – transparency
- USAA – best for war veterans, military members, and their families
Auto Insurance Components
Auto insurance policies come with various components with 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
Some of the 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: In case 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 Motorist
In case you get into an accident due to some other driver’s fault, and they don’t have any kind of insurance, uninsured motorist coverage covers all of your medical bills. In some countries, this coverage also pays for any car damages that have occurred.
On the other hand, if the person that causes the accident is underinsured (they have coverage, but it won’t cover for 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 were unable to take care of your kid at home and had to pay for a nanny the whole time while you were in recovery, this component will cover these expenses.
This kind of coverage protects our vehicles from a wide range of damages, not just accidents. It covers things like vandalism, fires, thefts, and so on.
When your vehicle gets damaged by a factor that is covered by this insurance, it will cover all the repair costs and even replace the vehicle 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
When shopping for auto insurance, make sure to 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.
Auto Insurance Offers Recap
Auto Insurance Frequently Asked Questions
Insurance companies take a look at various factors, including the applicant’s age, driving record, commute, credit, and so on. An insurance company will also check the safety feature, power, and modern of your vehicle before they determine your premiums.
The general rule is simple – the higher the risk an applicant is, the higher the premiums will be. If possible, do everything you can to show that you aren’t a high-risk applicant.
Sometimes it does, and sometimes it doesn’t. It all depends on the policy. A lot of auto insurance policies come with rental car coverage, as well. On the other hand, make sure to check your individual coverages as they might include car rental protection.
A deductible is an amount that you have to pay for in case of a covered event. Insurers and insurance companies agree on deductibles, and they are outlined in policy terms.
Simply put, if you have a deductible that is $600 and the whole claim is $4000, you will have to pay the $600 while the insurance company will take care of the remaining $3400. In case the loss is under your deductible, you will have to pay for all of it even though you have coverage.
The majority of auto insurance policies last for a year. However, there are insurance companies that offer insurance for shorter periods. Some might give you 6 months and up to 3 months.
This is an ideal option for people who plan to get a new vehicle real soon and don’t want to pay for insurance that they aren’t going to be using anymore.
Of course, most insurance companies offer online quotes for free, as we do. This quote will give you a rough estimate while relying on the information that you provide. The quote is completely free, and through it, you can even get your insurance policy online.