The government requires basic personal car insurance. It gives you financial protection during an accident. However, is car insurance enough? What are the options that you have? In this article, learn how the auto insurance works and what are its types of coverage that are available for you.
The Basics of Auto Insurance
Auto insurance is an agreement or contract between you and the insurance company. The contract refers to the protection that the company is bound to provide you in the event of theft or accident. In exchange for paying a fee or premium, the insurer agrees to pay your losses as agreed in the policy.
In general, auto insurance will provide coverage for the following items:
- Liability-This pertains to your legal responsibility for others in cases of property damage and bodily injury.
- Medical-This refers to the cost of treating injuries, lost wages, funeral expenses, and rehabilitation expenses.
- Property- This includes theft or damage to your car.
In sum, the laws of the country require basic car insurance. Meanwhile, car insurance coverage is priced differently. You can check your insurer now and get a car insurance quote. This will let you customize coverage amounts that will suit your exact budget and needs. In general, the policies available are issued for six-month or one-year timeframes. These policies are renewable. The insurance company will send a notice when it is now time to pay your premium and renew the policy.
The Coverage of Auto Insurance
The auto insurance policy will cover you and the members of your family. This is true whether you are driving your car or someone else’s car with their permission. Moreover, your policy will provide coverage if someone who is not included in the policy is driving your car with your permission.
Meanwhile, your auto policy will cover only you. This is true whether you are commuting to work, taking a trip, or driving your car. It will not provide coverage whenever you are using your car for commercial purposes like delivering pizzas.
Furthermore, the personal car insurance policy will not provide coverage if you are using your car to provide transportation to others via ride-sharing services such as Lyft or Uber. Some insurers now offer supplemental insurance products that will extend the coverage for car owners who provide ride-sharing services. You can check your insurer now and get a car insurance quote.
Mandatory Auto Insurance Coverage
The requirements for auto insurance policy differ per location. If you are financing a car, your lender might provide you with different requirements. The majority of the car insurer like the HL Assurance will require the car owners to include:
- Bodily Injury liability-This will cover expenses, which are associated with injuries or even death. You or another driver can cause this while you are on the road.
- Personal Injury Protection or Medical payments-This one will reimburse medical expenses for injuries to you or any other passengers. This can cover lost wages and other related expenses.
- Property damage liability-This will reimburse other parties for damage that you or other driver operating your car has caused to another automobile or property. An example can be a building, fence, or utility pole.
- Uninsured motorist coverage-This will reimburse you during an accident caused by a driver who does not have any auto insurance policy. This can happen in case of a hit-and-run. You can buy this underinsured motorist coverage that can cover the costs.
Even if the uninsured motorist coverage and personal injury protection are optional in your place, you can consider adding them to your insurance policy for wider protection.
While the most basic and the legally required auto insurance coverage can cover the damage of other cars, this will not cover damage to your car. As such, here are some optional coverages:
- Collision-This will reimburse you for damage to your car that will occur due to a collision with an object or another vehicle like a guardrail or tree and you are at fault. This one will not reimburse you for any mechanical failure or wear-and-tear of your car. However, HL Assurance can cover damages done to your car because of potholes and others.
- Comprehensive- This one can provide comprehensive coverage from damage and theft that are caused by an incident. Examples would be a flood, fire, hail, vandalism, falling trees or rocks, and other hazards.
- Glass Coverage- This will provide coverage from windshield damage that is very common nowadays. There are car policies that include no-deductible glass coverage like side windows, glass sunroofs, and rear windows. Moreover, you can also buy supplemental glass coverage.
Comprehensive and collision coverage will only cover the market value of your car. This will not reimburse you for whatever cost you have paid for it especially that new cars can depreciate quickly. If your car is stolen, there may be a gap between your insurance coverage and what you owe on the vehicle. To cover this, you can consider buying gap insurance to pay for the difference.