Car Insurance 101: What every owner should know about coverage types, benefits, and tips to choose the right policy for your needs.
Introduction
Having a car comes with a lot of responsibility and part of that responsibility is having the right insurance coverage in place. Car insurance is your financial safety net should you be involved in an accident, theft or other damage. So you do not end up paying large out of pocket costs. If you are a new driver or an experienced vehicle owner understanding the basics of car insurance can lead to smart decisions and the right coverage for you.
What is Car Insurance?
Your car insurance is basically a deal you make with an insurance company. You pay them a premium and in return they will cover you financially if your car gets in an accident is stolen or is otherwise damaged. Depending on the coverage you choose it can be cover damage to your vehicle, medical expenses, liability for injuries to other people and even legal fees.
Types of Car Insurance Coverage
Liability Coverage
This is sort of the most basic form of car insurance and required by most states.
Bodily Injury Liability:
Covers medical bills, lost wages and legal fees when you injure someone in an accident.
Property Damage Liability:
Pays for repair or replacement of someone else property when you are at fault in an accident.
Collision Coverage
Collision coverage pays for damage to your car from a collision regardless of fault. If you lease or finance your car lenders often mandate this coverage.
Comprehensive Coverage
This coverage can protect you from damage that is not collision related such as theft, vandalism, natural disasters, fire and animal collisions. Lenders typically require it for financed vehicles.
Personal Injury Protection
Also known as no fault insurance, personal injury protection pays for medical cost lost wages and even funeral cost for you and your passenger regardless of fault in an accident.
How Car Insurance Premiums are Calculated
Age and Gender: Young, inexperienced drivers tend to pay more for coverage.
Driving Record: A clean driving history means lower rates while accidents andctraffic violations can increase premiums.
Where you live: Your cost will tend to be higher in urban area with lots of traffic and high rates of theft.
Type of Vehicle: Luxury and sports cars are usually more expensive to insure because repairs are more expensive.
How to Lower Your Car Insurance Costs
Here are some tips for saving money on car insurance
Shop around: get quotes from different insurers to get the best rate.
Raise Deductibles: Higher deductibles (the amount you pay out of your pocket before your insurance pays) can reduce your premium.
Bundle Policies: If you have home or renters insurance, bundle it with your car insurance.
Drive Clean: Keeping a traffic violation and accident free driving record can help you in
maintain low rates.
What to Do After an Accident
If you have been involved in a car accident, these are the steps you should take in order to help facilitate your claims process:
Check for Injuries: The first step is to be safe and get help if necessary.
Call the police: A police report will be needed for processing an insurance claim.
Exchange Information: Get names, insurance information and contact details from other drivers.
Document The Scene: Photograph any damage to your vehicles as well as photos of the road conditions, anything that could be relevant.
The Most Common Myths About Car Insurance
So here are some of the common myths regarding car insurance.
Myth: Red Cars Are More Expensive to Insure
Truth: Insurance companies do not charge you more for your car based upon its color.
Myth: Your Insurer Covers Everything
Truth: The coverage is only what you are paying for, for example liability insurance would not cover damage to your own car.
Myth: You are Covered for Stolen Personal Items in Your Car
Truth: A car insurance policy does not cover your personal belongings you will need renter insurance or homeowner insurance for that.
Myth: Insurance Follows the Driver, Not the Car
Truth: With few exceptions auto insurance is tied to the car. So if someone else is behind the wheel of your car and crashes, your insurance can be on the hook.
Final Thoughts
Car insurance is an essential investment that offers the financial safety in the event of accidents thefts or damages. By familiarizing yourself with the different types of coverage how premiums are calculated and how to cut costs you can make wiser choices. As always read the fine print compare the rates and make certain you have enough coverage to protect yourself and your vehicle.
