What You Must Know About Auto Insurance

You may already have it or know that you will need it when you buy a car. What do you know about auto insurance? Do you have a good understanding of liability coverage? What other options are available? Do you even understand why you need it? Let’s take a look at the basics of auto insurance.

Why do I need auto insurance?
The purchase of auto insurance policies is required by all 50 states. It is mandatory, but you might still be curious about why and what it can do. It protects you against financial loss due to damage to property or injuries caused by vandalism, theft, and natural disasters.

Every state requires you to have minimum auto insurance. This is the liability coverage. There are other coverages available, and some that may be required depending on your state’s laws. Your auto loan lender may also require that you purchase auto insurance coverage if you lease or loan your vehicle.

So what’s the Basic?
Every state requires you to have liability coverage. This coverage covers all liability arising from auto accidents. There are two types of liability coverage:

1.Property damage liability – This covers repairs or replacement costs for vehicles owned by other people (or other parties involved in an accident). If property is damaged in a car accident, this also covers the replacement or repair.

2.Bodily injury Liability – This protects your assets and pays for medical bills for other victims of an auto accident.
Basic liability coverage covers legal costs if you are sued for a car accident.

Additional Coverages
Although liability coverage is the most basic type of auto insurance it does not cover any damages or injuries you may cause to others. However, your losses are not covered. If you are at fault, then you could end up paying for them. Although these types of coverages can be purchased at no additional cost, they are a popular option to ensure that you are fully protected.

1.Collision Insurance covers any costs of repair or replacement for your vehicle if it is involved in an accident.

2.Comprehensive coverage protects your car against any damage caused by other than auto accidents. These include vandalism, fire, flood, theft, and flooding.

3.Underinsured/Uninsured Motorist Coverage protects you against losses during accidents caused by drivers who have little or no coverage at all.

4.Personal injury protection/Medical payments coverage covers medical and/or funeral expenses of passengers in your vehicle at the time of an accident. It covers all persons listed on your policy, regardless of whether they are riding in another vehicle or walking to the accident site.

Can I be Covered Always?
Your insurance company (or another party’s insurance company if he is at-fault) covers most expenses. However, you must also cover deductibles, exclusions, and other costs beyond the policy limits.

What about my premiums?
The type of coverage you choose and any add-ons you purchase will affect the premiums. Your age, your neighborhood/city/state, your car make and model and driving record are all important determinants of your auto insurance premiums. Insurance companies will be able to tell if you are at risk of auto accidents or damage. If so, your premiums may increase.

Where do I start?
It is important to shop around for the best auto insurance policy. It is a great idea to compare the various options and get quotes from every auto insurance provider to find the best deal. It is important to take the time to fully understand your auto insurance policy and do background research about your insurance provider. Don’t skimp on auto insurance or rush to get it.