In our increasingly mobile world, driving is more common than ever, and so are car accidents. Buying auto insurance in case of an accident is not merely practical–it’s the law. Every car must be insured with a minimal amount of coverage before it hits the streets. Unfortunately, buying auto insurance can be both expensive and confusing. In order to choose the right type and proper amount of insurance, it is necessary to know the different types of coverage and how they apply to your situation.
These are the three most common types of coverage to consider:
1–Liability insurance covers most damages for which you are at fault. It will cover damage to other people’s property as well as pay for the medical bills resulting from any injuries you cause. In most states liability insurance is requisite.
2–Comprehensive insurance covers fire, vandalism, theft, and flood. In some cases, it also covers accidents caused by drivers who don’t carry insurance; this is known as uninsured motorist coverage. According to Colorado attorney Mark A. Simon, “uninsured motorist coverage allows the insurance company to fill in for the other driver’s insurance company and pay your medical bills and damages.” If your insurance company’s comprehensive insurance policy does not include uninsured motorist coverage, it can be added separately.
3–Collision insurance pays to repair or replace your vehicle after an accident regardless of whose fault it was. It may also cover towing and salvage expenses. This insurance often only applies if you use a repair shop approved by your insrance company.
There is no set insurance policy for all drivers across the board. The amount of each of the above types of insurance you buy is determined by assessing your individual situation on many levels.
Check your state’s regulations. According to the New York Department of Financial Services, every state has “minimum coverages and amounts of insurance that must be purchased to satisfy the financial responsibility requirements needed to register your car and obtain license plates.” Lending institutions also have regulations for leased vehicles, so check with them.
Where you live has a huge impact on your insurance needs. If you live in a congested area, you are more likely to get into accidents because of the heavy traffic. Consider increasing the amount of liability and collision insurance in your policy. If you live in a tough neighborhood and park on the street, an increase in comprehensive insurance makes sense.
When buying insurance, consider your driving record. Is your record practically perfect or is it nothing to brag about? Good drivers can decrease liability insurance, while poor drivers may need an increase.
The biggest determining factor for most people is price. Ask an insurance agent for a quote based on your age, driving record, and model of car. Your agent will help you find the balance between coverage and cost.
Understanding basic insurance coverage will help you safely insure your vehicle in a manner that best suits your unique situation. Soon you will be well on your way to being financially protected on the road.