Insuring your car before you take it to the streets is mandatory and for good measure – driving in itself inherently risky and therefore should never be attempted if you don’t have insurance irrespective of how much of a perfectionist you are when it comes to driving.
Getting caught without car insurance can have severe consequences – You may be fined, your licence or registration suspended and, in some cases, be sentenced to jail. So, always make sure you have your insurance documentation, registration and licence on you every time you fire up your motor.
Choosing the right car insurance can be a bit difficult with so many companies offering such a vast catalogue of plans.
It always pays to do some research before paying up as knowing the specifics may help you choose a plan that This list will attempt to provide a better understanding of things before you invest in a policy.
1. What is covered under a basic car insurance policy?
Different types of car insurance coverages exist, a few of them are optional extras and hence may not be part of a basic insurance policy – Although they have their own merits as well and will be discussed later.
Your insurance premium may vary depending upon your vehicle model, its condition, the task it is meant to be used for, the average miles travelled per year and if your car has any modifications done. The basic coverage you are entitled to get is the Liability Coverage and is required by law in 49 US states.
Liability coverage has two parts – Property and bodily damage. It is basically responsible for covering damages when you are responsible for the accident and you end up causing damage to others’ property or inflicting unintentional injuries to other people.
Your liability coverage will cover the cost of medical services and repair work required by affected individuals and your legal costs in case you get sued.
2. What about my repair costs?
A basic insurance policy with liability coverage does spare you the burden of compensating for damages to other people in the event of an accident – but does nothing for your own repairs.
Physical damage to your car is dealt with by coverages such as Collision or Comprehensive coverage instead. These are not mandatory by law and therefore not necessarily a part of the answer to the question that is – what is car insurance? You are most likely required to set a deductible should you hope to avail such coverages.
Collision coverage – Covers necessary repairs for damages sustained in the latest crash. In the event of a total loss, where the cost of repairs is estimated to be more than the total value of your vehicle, you will be paid the total cash value instead of repairs.
Collision coverage also has you covered in case you fall victim to hit and run or in the event where a person responsible for causing you doesn’t have adequate insurance to cover the cost of all repair work needed.
Comprehensive coverage – Another optional coverage, Comprehensive coverage is responsible for damages sustained outside a car crash. Sometimes, a “Complete” car insurance is referred to a policy that consists of Liability, Collision and Comprehensive coverage.
Comprehensive coverage comes in handy in instances such as damage from unforeseen circumstances such as:
- Your office parking lot catches an electric fire and your car gets damaged.
- Something falls on your car and causes heavy damage – Can be a tree, lamp post or a window washing platform.
- Severe rainfall floods your garage and damages your car.
- You hit cattle that suddenly appears in front of your car
- In case your car gets stolen and cannot be recovered, you will be paid the total cash value of the car. In case your car suffers damage due to attempted theft, you are covered as well.
Do understand that Comprehensive Coverage is restricted to damages to your car itself and does not cover for loss of valuables or damage to expensive personal items kept in your car – These include your laptop, phone, jewellery or musical instruments.
All things considered; it is definitely a good idea to include comprehensive coverage as a part of your insurance as chance incidents can cause a significant amount of damage despite you doing nothing wrong at all – generating steep repair costs.
Certain states may offer a zero-dollar insurance deductible on Comprehensive Coverage so be sure to check it out. This is especially beneficial where repairs are done free of charge in the event of damages sustained from a , forest fire or hailstorm.
3. Wait, what is a deductible again?
A deductible is a portion of your repair costs post an accident that you are liable to pay while the rest is covered by your insurance provider.
To put it simply, the higher your insurance premium, the lower the deductible and vice versa. Therefore, choose which path you wish to tread – If you are less likely to get in an accident simply because you drive occasionally, you can opt for a low premium offering compared to someone who spends a significant amount of their time driving on the interstate.
Optional Coverages which are deductible free include Personal Injury Protection and Medical payments coverage. The former pays for healthcare services for you and passengers involved in a crash. It works only after your health insurance claim has been initiated. The latter covers medical costs beyond the coverage of your health insurance.
4. What if I wasn’t driving my car when it was involved in a crash?
Every insurance policy allows you to list a certain number of people in your household who use your car. It is important that you include everyone and not leave out people who drive on rare occasions.
If you have lent your car to a friend who doesn’t have a history of using your car often, you are still covered should anything happen – provided your friend had your consent for using the car.
Companies may charge a premium to add more members than the default number or if your list includes any high-risk drivers.
5. What is not covered?
- If you are found providing rideshare services such as Uber.
- Any kind of routine maintenance.
- Not all insurance providers may cover classic vehicles.
- An accident resulting from racing or stunt driving.
The above points cover some of the most basic yet crucial facts which you must know before you buy your insurance coverage. May you have a safe and hassle-free ownership experience!