Every state needs a specific type of auto insurance. The type of car insurance you choose will provide the driver with much needed financial security to the driver in case of an accident, or any other issues. A contract between you and the insurance company, car insurance or auto insurance is what would enable the insurance company to pay you for your losses just in case any such loss does happen. But, have you ever wondered how does car insurance work?
What is Car Insurance?
Car Insurance is helpful in covering and paying for any of the damages to your car or even any third party property. It can be considered to be a contract between you and the insurance service provider and protects you financially when you are liable to pay for someone else’s damages and injuries.
Some car insurance services can also be a good option to help you pay for the medical bills if you or any of your passengers are injured or need medical attention of any sort.
Do you Need Car Insurance?
Auto insurance is mandatory in most of the countries and states around the world. If we talk about the United States, a car insurance is much needed in every state except for New Hampshire. In most of the stats, driving without an insurance can end up in you paying penalties, suspension of your license or even a prison term.
You can refer to the state insurance laws pertaining to your state. The laws help you understand the minimum insurance cover that you are expected to be governed by, and other stipulations. You can decide to add up more coverage to the bare minimum suggested, but there are no obligations as such.
What are the different types of car insurance?
Car insurance comes in different flavours and forms. You can pick from multiple types of car insurance types based on your individual preferences.
Some basic types of insurance options you can go with ca include –
- Liability Insurance – The liability insurance covers the damages caused to others. Imagine the situation where you are at fault, and the other party needs to pay for medical help or for the repairs of the vehicle, the liability Insurance tasks care of the issues.
- Collision coverage – Collision coverage does cover practically everything that may happen to your vehicle when you are driving. It can be a collision involving another car, any object like a pole, the vehicle turning turtle, or even the damage from the bad road conditions.
- Comprehensive Coverage – The Comprehensive coverage moves beyond the collision coverage. It handles everything beyond the mere collision or the other damages that are caused when you are behind the wheel. In simple words, comprehensive coverage will cover even natural calamities and other conditions. It will cover the conditions such as earthquakes, windstorms, hail, floods, fires, falling objects and explosions. The coverage also works well with areas such as vandalism and riots.
How much Insurance should you go with?
Well, the amount that you can get insured for would be dependent on a large number of factors. To begin with, we would suggest you to check the minimum requirements put forward by your state. That should invariably be the minimum coverage you should go with. It may be noticed that almost all the states in the US require you to opt for the liability coverage.
When deciding on w=how much insurance coverage you would want to go with, it is advisable to give a thought to your assets and their value. When opting for the Collision or Comprehensive coverage, it may be worthwhile to check out the value of your vehicle. It may not be a good idea if you are forced to pay more than what your vehicle is worthy of.
How is your Vehicle insurance premium determined?
Have you ever given a thought as to why is car insurance so high? There can be several reasons that can result in such issues. A few of the deciding factors can include the following factors –
- Type of the car you drive.
- The amount of miles or distance that you have covered
- Your driving history
- Your gender and marital status
- Your age
- The place you live in
There is not much of a difference when it comes to how does car insurance work when you are not at fault, or when you are at fault. In any case, it is advisable to give a thought to the type of coverage you are planning to go with.
Benefits of having a car insurance
Having gone through those details, it would be advisable to check out why a car insurance should be quite recommended. Understanding the benefits of car insurance can be a great option in helping you decide the right course of action when opting for a car insurance.
The primary benefit you stand to gain when opting for the car insurance or any auto insurance for that matter is the financial security that it offers you. Irrespective of whether you are caught in an accident and you are at fault, or you are hit by an uninsured car, the coverage offered by car insurance covers you. The auto insurance will cover you for several aspects that include the damages to the vehicles, medical bills and property damage. Without the right type of car insurance, you would be forced to pay for the money out of your pocket.
Well, that should provide you with a clear indication and information on how does car insurance work and how effective it can be in providing you with the best possible financial protection.