Auto Insurance
If you possess your own car, your most likely to know a little about car insurance. Its primary use is to provide protection against losses incurred as a result of traffic accidents and against liability that could be incurred in an accident. In many jurisdictions it is compulsory to have vehicle insurance before using or keeping a motor vehicle on public roads. Most jurisdictions relate insurance to both the car and the driver, however the degree of each varies greatly.
Depending on the jurisdiction, the insurance premium can be either mandated by the government or determined by the insurance company in accordance to a framework of regulations set by the government. Often, the insurer will have more freedom to set the price on physical damage coverages than on mandatory liability coverages. When the premium is not mandated by the government, it is usually derived from the calculations of an actuary based on statistical data. The premium can vary depending on many factors that are believed to have an impact on the expected cost of future claims. Those factors can include the car characteristics, the coverage selected (deductible, limit, covered perils), the profile of the driver (age, gender, driving history) and the usage of the car (commute to work or not, predicted annual distance driven).
Prior to purchasing auto insurance, you need to consider a variety of factors in which includes your driving record, what car you are considering to buy and the sum of money you are prepared to pay. You would need to understand the simple basics of auto insurance in which will make you much more confident to choose the car insurance policy that is able to take care of your needs in the event of an accident. You might have heard of the term deductible or premium. But, do you really know the different parts of an auto insurance policy and are you able to identify the best coverage?
Types of Coverage
When you buy a new car, you need to buy insurance. When you buy car insurance, you are buying what is called a policy. Your policy is based on a range of factors including what kind of car you drive and what kind of insurance you want to buy. Auto insurance policies are a package of different types of insurance coverage. You would then need to consider the most affordable car insurance.
First, you need to understand an auto insurance policy is to learn the different types of coverage insurance companies offer. Some of this coverage may be required by your state or country and some of the coverage may be optional. It would be easier to go to a car insurance agency and get them to explain the different types of plans for car insurance together with a car insurance quote.
- Liability - This coverage pays for accidental bodily injury and property damages to others. Injury damages include medical expenses, pain and suffering and lost wages. Property damage includes damaged property and automobiles. This coverage also pays defense and court costs. State laws determine how much liability coverage you must purchase, but you can always get more coverage than your state requires.
- Collision covers your car repair in case of a car accident when you are liable for the accident.
- Comprehensive - This coverage pays to replace of fix your car in case of an accident caused by third party or “act of god” in which are caused by fire, wind, hail, flood, vandalism or theft.
- Medical Coverage - Pays medical expenses regardless of fault when the expenses are caused by an auto accident.
- PIP - Personal Injury Protection (PIP) is required in some states. This coverage pays medical expenses for the insured driver, regardless of fault, for treatment due to an auto accident.
- Uninsured Motorist – This pays your car’s damages when an auto accident is caused by a driver who doesn’t have liability insurance.
- Underinsured Motorist – This pays your car’s damages when an auto accident is caused by someone who has insufficient liability insurance.
- Rental Reimbursement - This type of coverage pays for a rental car if your car is damaged and needs fixing due to an auto accident. This coverage often has a fixed rate for daily rentals.