In the course of this post, you would understand the coverage for your car and how best you can go about getting them online.
So if you’re looking for something related to auto insurance, then this article is prepared for you and your friends. Ensure you read its content with keen attention and apply it accordingly. We’ve included some important links at the end of this post will we believe may be of help to you.
What is auto insurance?
If you’re reading this post, I guess this question is one of the most important aspects of this article. The reason is that knowing the meaning of what you’re set to embark on most times gives us a preview of what we’re expected to know about the subject in question.
So in a simple term, one could say that an auto insurance is a contract between you and the insurance company that protects you against financial loss in the event of an accident or theft.
In exchange for your paying a premium, the insurance company agrees to pay your losses as outlined in your policy. It’s important to also that protection enough? What are the options? To get the right answer to this question, continue reading this post to the end as all that you need to note about this form of insurance policy has been outlined in the course of this post.
Auto Insurance Coverage
If you wish to car insured, it’s very necessary for you to know the types of coverage that insurance policy can cover. Auto insurance provides coverage for:
1. Property: such as damage to or theft of your car
2. Liability: your legal responsibility to others for bodily injury or property damage
3. Medical: the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses.
U.S. citizens are expected to note that basic personal auto insurance is mandated by most states, and laws vary. Interestingly, auto insurance coverages are priced individually (a la carte). This is to let you customize coverage amounts to suit your exact needs and budget. Consequently, policies are generally issued for six-month or one-year timeframes and are renewable.
The insurance company sends a notice when it’s time to renew the policy and pay your premium. The next questions we are expected to ask ourselves are as follows: who is covered by auto insurance and under what circumstances? Want to see the answer? Continue reading…
Who is covered by my auto insurance—and under what circumstances?
Your auto insurance policy covers a lot. Here’s some of them. Your auto policy will cover you and other family members on your policy, whether driving your car or someone else’s car (with their permission). Your policy also provides coverage if someone who is not on your policy is driving your car with your consent.
Your personal auto policy only covers personal driving, whether you’re commuting to work, running errands or taking a trip. It will not provide coverage if you use your car for commercial purposes—for instance, if you deliver pizzas.
Personal auto insurance will also not provide coverage if you use your car to provide transportation to others through a ride-sharing service such as Uber or Lyft. Some auto insurers, however, are now offering supplemental insurance products (at additional cost) that extend coverage for vehicle owners providing ride-sharing services.
Is auto insurance coverage mandatory?
Well, recently, a friend of mine asked me the above question. Well, here’re some of the answers we’ve compiled in response to the question. First and foremost, let me quickly say that auto insurance requirements vary from state to state. If you’re financing a car, your lender may also have its own requirements. Nearly every state requires car owners to carry:
Bodily injury liability: which covers costs associated with injuries or death that you or another driver causes while driving your car.
Property damage liability: which reimburses others for damage that you or another driver operating your car causes to another vehicle or other property, such as a fence, building or utility pole.
In addition, many states require that you carry:
Medical payments or personal injury protection (PIP): which provides reimbursement for medical expenses for injuries to you or your passengers. It will also cover lost wages and other related expenses.
Uninsured motorist coverage reimburses you when an accident is caused by a driver who does not have auto insurance—or in the case of a hit-and-run. You can also purchase underinsured motorist coverage, which will cover costs when another driver lacks adequate coverage to pay the costs of a serious accident.
Even if PIP and uninsured motorist coverage are optional in your state, consider adding them to your policy for greater financial protection. All of the aforementioned auto insurance coverages and other types of auto insurance coverage that are typical are also listed below.
While most basic, legally mandated auto insurance covers the damage your car causes, it does not cover damage to your own car. To cover your own car, you should consider these optional coverages: collision, comprehensive and glass cover. See details explanation below;
What basic Auto Insurance covered
While different states have different mandates for auto insurance, most basic car policies consist of six types of coverage. Here’s what you need to know about each.
While different states mandate different types of insurance and there are several additional options (such as gap insurance) available, most basic auto policies consist of: bodily injury liability, personal injury protection, property damage liability, collision, comprehensive and uninsured/underinsured motorist.
Note that each type of coverage is priced separately, so there is variability in policy limits and pricing.
Bodily injury liability
Bodily injury liability coverage applies to injuries that you, the designated driver or policyholder, cause to someone else. You and family members listed on the policy are also covered when driving someone else’s car with their permission.
It’s very important to have enough liability insurance, because if you are involved in a serious accident, you may be sued for a large sum of money. It’s recommended that policyholders buy more than the state-required minimum liability insurance, enough to protect assets such as your home and savings.
Medical payments or personal injury protection (PIP)
This coverage pays for the treatment of injuries to the driver and passengers of the policyholder’s car. At its broadest, PIP can cover medical payments, lost wages and the cost of replacing services normally performed by someone injured in an auto accident. It may also cover funeral costs.
Property damage liability
This coverage pays for damage you (or someone driving the car with your permission) may cause to someone else’s property. Usually, this means damage to someone else’s car, but it also includes damage to lamp posts, telephone poles, fences, buildings or other structures your car hit.
Collision coverage pays for damage to your car resulting from a collision with another car, an object, such as a tree or telephone pole, or as a result of flipping over (note that collisions with deer are covered under comprehensive). It also covers damage caused by potholes. Collision coverage is generally sold with a separate deductible.
Even if you are at fault for the accident, your collision coverage will reimburse you for the costs of repairing your car, minus the deductible. If you’re not at fault, your insurance company may try to recover the amount they paid you from the other driver’s insurance company and, if they are successful, you’ll also be reimbursed for the deductible.
This coverage reimburses you for loss due to theft or damage caused by something other than a collision with another car or object. Comprehensive covers events such as fire, falling objects, missiles, explosion, earthquake, windstorm, hail, flood, vandalism, riot, or contact with animals such as birds or deer.
It will also pay to repair your windshield if it is cracked or shattered. Comprehensive insurance is usually sold with a separate deductible, although some insurers may offer the glass portion of the coverage without a deductible.
Uninsured and underinsured motorist coverage
Underinsured motorist coverage reimburses you, a member of your family, or a designated driver if one of you is hit by an uninsured driver or a driver who doesn’t have sufficient insurance to pay for your total loss.
This coverage also offers protection in the event a covered driver is the victim of a hit-and-run or if, as a pedestrian, you are struck by an uninsured or underinsured motorist.
Glass Coverage provides coverage from windshield damage, which is common. Some auto policies include no-deductible glass coverage, which also includes side windows, rear windows and glass sunroofs. Or you can buy supplemental glass coverage.
Still, need more? Alright…here’s our bonus for you.
Bonus: What is gap insurance and do I need it?
Worthy of note is the fact that collision and comprehensive insurance policies only cover the market value of your car, not what you paid for it—and new cars depreciate quickly. If your car is totaled or stolen, there may be a “gap” between what you owe on the vehicle and your insurance coverage. To cover this, you may want to look into purchasing gap insurance to pay the difference.
Note that for leased vehicles, gap coverage is usually rolled into your lease payments. We shall through more light on this form of insurance in our subsequent article.
How to Find the Right Auto Insurance Policy
I guess one is not wrong if he/she said that once you have a clear picture of how you use your car and your priorities, you’re ready to shop for an insurance policy. In general, you’ll agree with me that it’s a good idea to compare policies from at least three different insurers. The reason is that you’ll want to consider fundamental factors such as coverage and price, but it’s also worth evaluating prospective insurers as well. The following are the most important factors to consider.
1. Types and amount of coverage
2. Price and deductibles
3. Evaluating insurance companies
In summary, while considering the types and amount of coverage, try to compare apples to apples when choosing your insurance policy. That is to say that all of the policies that you review should have the same types and amount of coverage.
Secondly, while considering price and deductible, when you compare prices, be aware of the amount of the deductible—how much you pay out of pocket before your insurance kicks in. Generally, you can lower your premium if you opt for a higher deductible.
Finally, when evaluating insurance companies, while price and coverage may be deciding factors when you purchase auto insurance, it’s worth considering the reputation and financial stability of prospective insurance providers as well.
First, double-check that an insurer is licensed in your state by visiting the website of your state’s insurance division—where you can also review information about consumer complaints filed against insurance companies.
In addition, you can check review websites and talk to friends about their experiences with insurers. Finally, take a few minutes to make sure prospective insurers are in good financial standing. Financial rating agencies will provide this information. Online tools will often provide rating information as well.