If you’re planning to purchase a car or any other vehicle, you must know about the different types of auto insurance coverage. Owning a car comes with a set of responsibilities, and car insurance is the most vital one of them.
You have to insure your vehicle so that in case of any accidents, damages, or injury, you won’t have a monetary loss. Financial security is the primary reason for automobile insurance.
Yours can be a private car or a commercial four-wheeler– you must have your insurance documents cleared, before hitting the road.
In most countries, having auto insurance is a must. If you are caught on the streets driving an uninsured vehicle, you may have to face legal troubles. Your state may levy a minimum amount that you must invest in your auto insurance, but it is certainly not mandatory that you have to stick to that amount. If you want additional coverage, you can upgrade your insurance by spending some more bucks.
Different Types of Coverage
When you’re on the road driving, it’s better to be safe than sorry. The reason why most states are strict about car insurance coverage is that it not only protects your vehicle against a huge financial jolt but also protects you, your family, and other people involved in the accident or collision.
So without further ado, let’s take a look at the different types of auto insurance coverage that you can choose for your possession.
- Third-Party Insurance– Liability & Property Damage
- This is the basic coverage that you must have. It protects the other drivers on the road, and you are legally not allowed to drive without this insurance. Property Damage Liability includes the cost of repair of the third party’s vehicle if you have caused damage to it. Bodily Injury Liability covers the medical expenses that follow an accident.
- Collision Coverage
In case your car collides with something, be it another car, a tree, lamppost, postbox, fence, or any other object, it will be covered by collision coverage, after subtracting the deductible. If you want to have additional protection for the property, you can insure your car with collision coverage, but it is not compulsory.
- Comprehensive Coverage
If you wish to protect your vehicle against unprecedented events, such as theft, fire, vandalism, weather, etc., you will receive protection from comprehensive coverage. Apart from the damages caused by collision, this coverage includes all other situations that may cause serious trouble to your car.
- Personal Protection
Personal Injury Protection is another significant coverage, but it’s not widely available at all places. It covers medical expenses like hospital bills, doctor’s fees, and so on. It also encompasses the income you have lost due to an accident.
- Medical Coverage
This one is quite similar to personal injury protection coverage. If your vehicle meets with an accident, the insurance will cover the cost of treatment for the injured passengers, including hospital bills, cost of surgery, and other related expenses.
- Uninsured Motorist Coverage
This is another type of auto insurance coverage that protects you if an uninsured vehicle is a reason behind your car’s damage. A driver without insurance won’t be able to pay for your damages, repairs, or medical expenses. In these scenarios, the uninsured motorist coverage comes to your rescue. Again, this is not mandatory, but it does offer additional protection and lets you sleep at night peacefully.
Factors That Determine The Cost of Car Insurance Premium
Type of Coverage
The amount of the insurance premium primarily depends on the coverage. Apart from liability and property damage, the other packages that you opt for as a part of your auto insurance, will add up to your premium. If you don’t wish to spend a hefty amount, then you can choose to pay only for the coverage that is mandatory in your region. And if extra security and safety are what you’re looking for, then you can go for the additional coverages we have mentioned above.
The Age of Your Car
If you own a brand new vehicle, the insurance cost would be higher than usual. In most cases, new cars are more expensive to repair, and their parts are pretty expensive too. On the other hand, if your car is a few years old, the premium would not be as high. However, if your vehicle is quite old, then again, you may have to spend a bigger amount on the premium. For old models, it becomes difficult to find replacement parts, and they come with a hefty price tag.
Another significant factor that specifies your premium amount is the model that you own. Usually, expensive cars, luxury cars, or sports cars require greater insurance amounts, as compared to regular cars. Repairing your luxury cars cost a lot more, so the insurance amount also goes up.
How to Choose the Right Auto Insurance Policy?
Choosing the right insurance is crucial, as it will offer great help in difficult times. To make sure that you don’t make any mistakes, try to keep in mind the following points before deciding upon a policy for your new vehicle.
Conduct in-depth research online to find out the various options available out there. You will come across plenty of policies, and you can pick the one that is the most suitable for you and your car.
It’s always a good idea to go with a well-known company for insuring your car. That way, you can sit back and relax, and you won’t have to worry about being scammed by some shady company.
Choose Your Deductible Wisely
The more the deductible, the lesser the insurance premium will be. But when some accident or damage occurs, you will be responsible for paying a lump sum amount, and you won’t receive a high amount of coverage. So before you choose a plan, don’t forget to choose the correct amount of deductible.
Auto insurance is an investment that protects you and your car against any unforeseen accidents. Depending on your preference, you can pick the most appropriate insurance coverage, that will come in handy in case some mishaps take place.