Auto insurance is, quite simply, a contract between you as the insured and an insurance provider that shields you from potential financial loss in case you get into an accident with a car or other vehicle. Auto insurance policies usually contain a wide variety of coverage for different needs that you decide on based on your personal needs. It’s important to keep in mind that there are two parties in an auto insurance policy: the insurer and the driver. While both have needs that must be met, it is the insurer who makes the profits. The insurance provider is the one that compensates for the losses incurred by others. Let’s take a look at how this works and why you should consider different types of coverage.
One type of coverage, most drivers consider absolutely necessary is personal injury protection. Personal injury protection covers medical expenses and other costs incurred due to an auto accident, regardless of who is at fault. This coverage can also be combined with comprehensive or collision insurance to provide you with total coverage whenever you need it. PIP, or personal injury protection, is one of the most commonly taken forms of insurance by drivers.
Another common type of auto insurance coverages that are required by law is collision and comprehensive insurance. Collision insurance protects against damages due to collisions with another vehicle, like when a car is rear-ended. Comprehensive insurance protects against damage due to fires, earthquakes, hail, storms, vandalism, or theft. This form of coverage is often required by law in order to drive a car on public roads. If you have a newer vehicle, it’s also advisable to purchase a minimal amount of collision and comprehensive insurance.
Many drivers do not think about this type of insurance when purchasing a car, but knowing what collision insurance covers and how much it could cost could save you money in the long run. Most insurance companies offer standard deductibles for policies, which means that the higher your deductible is, the lower your premiums will be. You can usually lower these premiums even more by raising your deductible. Some insurance companies do not have any deductibles but offer a higher rate if you do have one. You will need to take care of this aspect of your policy, though, so be sure to read the terms of your policy carefully.
Liability limits are something else that you should investigate before purchasing an auto policy. These limits are the maximum amount of money that an insurer will pay out if you are found at fault in a car accident. There are different limits in place depending on whether the accident was your fault or not. Some states have no-fault laws, meaning that if someone is injured in a car accident, the person who caused the accident only has to prove that they were not at fault. In other states, the person who was at fault must prove that they were at fault.
Auto insurance policy coverage options are important for anyone who is interested in buying an automobile insurance policy. You may be interested in purchasing coverage options that will help protect you in the event that you are in a major accident. This type of protection may make your premiums go down, especially if you are not only insured, but also carry comprehensive coverage as well. You can easily compare the cost and value of various auto insurance coverage options by visiting the websites of individual insurance companies.