As a motorist, you’re required to carry some car insurance in all but a few states. Some states require at least liability insurance coverage, while other states require full coverage or personal injury car insurance. If you’re wondering what to know about car insurance, this guide can help you decide which type of auto insurance coverage you need for your unique situation.
What Are the Different Car Insurance Coverages?
There are several types of car insurance coverage you can obtain.
Two of the main types of insurance policies include:
- Personal injury protection
Liability insurance is the most common type of coverage you can get and is the one required in almost all states. This affordable insurance covers the cost of damage to another vehicle, property, or bodily injury if you are the cause of an auto accident. Keep in mind that liability insurance doesn’t cover the cost of damage to your vehicle or your medical costs if you caused the accident.
Liability insurance covers three main categories and you’ll often see monetary numbers represented as the 25/50/25 rule. While these are basic numbers, each state can raise or lower these liability numbers. According to NerdWallet, these 25/50/25 numbers represent the following:
- $25,000 bodily injury liability per person
- $50,000 bodily injury liability per accident
- $25,000 property damage liability per accident
Personal Injury Protection
If you’re in an accident and you or your passengers are injured, personal injury protection will help to cover the cost of medical and rehabilitation expenses. In addition, personal injury protection can help cover other expenses such as lost wages when you’re recovering from a car accident.
What Are Other Car Insurance Coverage Options?
Consider these car insurance options to give you extra peace of mind while driving:
- Uninsured/underinsured insurance
- Collision coverage
- Comprehensive coverage
- Gap insurance
- Full coverage insurance
When you have uninsured/underinsured insurance coverage on your policy, your insurance company will help to pay costs incurred if a motorist with no insurance or insufficient insurance causes an accident that results in damage to your car or bodily injury to you or your passengers. Consider adding this important type of car insurance coverage to help offset costs from uninsured or underinsured drivers.
When you have liability insurance, your insurance carrier will only pay for damages to the other person’s car or any bodily injury they receive if you caused the accident. Liability insurance doesn’t cover damage to your vehicle. However, when you have collision coverage, your insurance company will pay for repairs to your car no matter who was at fault for the accident.
Sometimes, damage can occur to your car when you’re not driving it. Comprehensive coverage will help to cover the costs of damage to your vehicle for the following situations:
- Extreme weather: Tornados, floods, hurricanes, or tsunamis can cause damage to your car.
- Falling objects: Comprehensive coverage can cover the cost of damage caused by falling tree branches, rock slides, or man-made objects.
- Vandalism: Having your tires slashed, windshield broken, or damage to the body of your vehicle due to acts of vandalism are covered under comprehensive insurance.
- Theft: If your car or possessions in your car are stolen, comprehensive coverage can help offset the replacement costs.
If you’re still making loan payments on your car, you’ll want to have gap insurance. According to ValuePenguin, If your car is declared a total loss after an accident, guaranteed asset protection, or gap insurance, will pay the difference between how much you still owe on the car to the car’s actual value at the time of the accident. This type of insurance helps relieve you of having to make car payments on a vehicle that’s been totaled. Once you’ve paid off your car loan, you won’t need gap insurance.
Full Coverage Insurance
Full coverage insurance includes your state’s minimal liability insurance plus collision and comprehensive coverage. Often, opting for full coverage insurance is an easy way to get the most coverage you’ll need.
What Are Important Things to Know About Car Insurance?
When it comes to car insurance rates, auto insurance companies take into consideration several factors to help them determine the monthly, semi-annual, or annual auto insurance rates. The process of evaluating and determining car insurance rates is called underwriting. Each insurer has a list of criteria that helps to determine a group of driver’s risk factors and to charge them according to their perceived risks.
Each car insurance company has distinct guidelines that help them determine the cost to risk ratio of a group of drivers. It’s wise to shop around to see what the various guidelines are to get the best car insurance rates for your situation.
How to Buy Car Insurance?
Shopping for the best car insurance rates is often a time-consuming job. You’ll want to get quotes from several insurers so that you can do side-by-side comparisons. Doing so can help you get the best rates and coverage.
An easy way to streamline the process of finding the best car insurance rates and coverage for your needs is to go through an independent insurance broker. Your broker will have you fill out an application and ask pertinent questions. Then they’ll take on the responsibility of getting multiple quotes. An independent broker can help guide you through the complicated process of getting car insurance for your unique requirements.
One of the main advantages of having an independent insurance broker is they can help you navigate the process of finding the perfect car insurance coverage you’ll need. Once your broker finds a company and agent that fits your criteria, your agent will explain each part of the policy so you can easily understand what it covers.
When you’re ready to get car insurance, shop around various companies and independent brokers to find the perfect auto insurer to get the rates and coverage you need to fit your budget and lifestyle.
Check this out if you need additional information, resources, or guidance on car insurance.
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Best Full Coverage Car Insurance: Everything You Need to Know
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