Auto Insurance (explained)”Car accidents can be costly and stressful. That’s why most states require you to have a minimum level of auto insurance to cover some of the expenses. But is that enough to protect you and your vehicle? What else can you do to reduce your risks and liabilities? In this article, we will explain the basics of car insurance and the different kinds of coverage you can choose from.”
Understanding How Auto Insurance Works?
“car insurance is an agreement between you and the insurer that covers you for the financial consequences of an accident or theft. you pay a certain amount of money, called a premium, to the insurer, and they promise to pay for your damages as specified in your policy.”
Auto Insurance/Car insurance is a protection plan that covers you for:
- Property :Such as repairs or replacement of your car if it is damaged or stolen
- Liability : Your legal obligation to pay for others’ bodily injury or property damage if you cause an accident
- Medical : the expenses of treating injuries, recovery and sometimes lost income and funeral costs.
Most U.S. states require you to have a basic level of auto insurance, but the rules vary. You can choose the amount of coverage you want for each type of protection, depending on your needs and budget.
You can buy policies for six-month or one-year periods and renew them when they expire. The insurance company will remind you when it is time to pay your premium and renew your policy.
Who will Benefit from my Auto Insurance Coverage?
When you get an auto policy ,you’re not just protecting your car. You’re also protecting yourself and your loved ones on your policy. No matter whose car you’re driving, as long as you have their consent, you can enjoy the same coverage as if you were driving your own car. And if someone else drives your car, they’re covered too, as long as they’re on your policy. That’s the peace of mind a good Auto Insurance Policy will offer you.
Your personal auto insurance is only for personal use of your car, such as going to work, doing errands or taking a vacation. It does not cover you if you use your car for business reasons—for example, if you deliver food.
“Personal auto insurance also does not cover you if you use your car to transport others for a fee through a service like Uber or Lyft. However, some auto insurance companies are now offering extra insurance products (for an additional fee) that give coverage to car owners who provide ride-sharing services.”
Why must I Have an Auto Insurance Coverage?
Driving a car is not just about getting from point A to point B. It’s also about being responsible for yourself and others on the road. That’s why you need auto insurance that suits your needs and your state’s laws. Depending on where you live and how you finance your car, you may have different auto insurance requirements. But most states have some common ones:
1.Bodily injury liability
This covers the medical bills and legal fees if you or someone else driving your car hurts or kills someone else.
2.Medical payments or personal injury protection(PIP) :
This helps you and your passengers with your own medical expenses and lost income if you get injured in a car accident.
3.Uninsured motorist coverage :
This protects you if you get hit by a driver who has no auto insurance or runs away from the scene. You can also get under insured motorist coverage, which helps you if the other driver has auto insurance but not enough to cover the full costs of the accident.
PIP and uninsured motorist coverage are optional in some states, but they can make a big difference in your financial security. Think about adding them to your policy for more peace of mind.
What Other Types of Auto Insurance Coverage are Typical?
If you cause damage to another car, the law requires you to have basic auto insurance. But what about your own car? If you want to protect it from different kinds of damage, you may need some extra coverages:
1.Collison Auto Insurance Coverage
Collision pays you back for damage to your car that happens when you crash into another car or something else, like a tree or a fence. You need this coverage if you are responsible for the accident. Collision coverage does not pay for things like engine problems or old tires, but it does pay for things like dents from potholes or flips from speeding.
2.Comprehensive Auto Insurance Coverage
Comprehensive covers you for damage to your car that is not caused by a crash, such as theft, fire, flood, vandalism, hail, falling rocks or trees and other risks—even if an asteroid hits your car!
3.Glass Auto Insurance Coverage
Glass Coverage covers you for damage to your windshield, which is very common. Some auto policies have glass coverage with no deductible, which means you don’t have to pay anything to get it fixed. This coverage also applies to other glass parts of your car, like the side windows, rear windows and glass sunroofs. You can also buy extra glass coverage if you want.
What is Gap Insurance? (Do I Need Gap Insurance Coverage?)
Collision and comprehensive only pay you the market value of your car, not the price you paid for it. And new cars lose value fast. If your car is totaled or stolen, you may owe more money on it than what your insurance pays you. This is called a “gap”. To cover this gap, you may want to buy gap insurance, which pays the difference between what you owe and what you get. If you lease a car, you may already have gap insurance included in your lease payments.
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