All The Essential Things You Need To Know About Car Insurance
Car insurance is a policy that provides car owners the financial protection they need against liabilities and losses. This insurance policy is mandatory, but the laws that mandate it may vary depending on the state or country that enforces these laws.
The mandatory minimum coverage represents the financial protection the assured (car owners) gets against third party liability and property damage. This coverage does not include own damage or losses.
All states require that drivers carry with them the compulsory coverage before they can drive their cars on public streets. Without such insurance policy, the state can penalize these drivers through fines and community service to suspension of their driving privileges for up to one year from revocation.
If accidents happen and you have no car insurance, you will have to shoulder all expenses relative to the accident such as but not limited to the following: medical expenses of all injured, cost of restoring the damaged vehicles (i.e. your own and that/those of the other party/ies), cost of damage to properties other than the vehicles. On top of these, you may also be held accountable for violating the state’s law on car insurance.
Car insurance policies are generally costly although the cost is dependent on several factors such as the following: insurance company, type of vehicle, extent of coverage, driving experience and record, as well as the age and gender of the assured to mention the basics. This insurance also goes by the names of auto insurance or motor insurance.
Different Types Of Coverage
There are basically five types of car insurance coverage:
This is the type of insurance that covers for the mandatory insurance policy the state requires. The insurance company will take over the financial responsibility and liability of the assured in the event the assured is found at fault in an accident.
The insurance company will pay for the following:
- Cost of medical treatment
- Cost of restoring of replacing damaged vehicle/s or property
Each state has its own mandatory minimum coverage for liability insurance, but prudence dictates to increase the amount of coverage for added financial protection.
This type of insurance provides financial protection not only for car accidents but also for other situations that will require the motorist to spend. Examples are the following: own damage and theft, vandalized car, and weather damage.
This type of policy is costlier than the other types but it can free the assured from any financial obligation should the need arise. For instance, if one loses his or her car to thieves, the insurance company will pay for the replacement of their vehicle.
This type pays for the cost of repairing your vehicle after a collision accident. If the repair cost exceeds the value of the automobile, the insurance company will pay an amount based on the value of the vehicle.
Newer cars get to benefit the most from this type of coverage. For older cars, one may want to exercise prudence in deciding whether or not their policy carries this coverage.
Personal Injury Insurance
Along with liability insurance, car owners and drivers should consider this coverage a necessity. This type will cover the cost of medical treatment of the assured and his passengers whether the assured is at fault or not. However, not all states offer this coverage.
Uninsured/Underinsured Motorist Protection Insurance
This coverage protects the assured from motorists who are either uninsured or underinsured.
What happens is that uninsured motorists may not be able to pay for the damages should an accident occur while the underinsured motorists may not be able to cover all their financial responsibility for the accident.
This coverage protects the assured from such circumstances as the insurance company will take over the responsibilities to compensate the assured.
Basic Steps To File A Claim
The process of filing an auto insurance claim may differ from one state to another. Nonetheless, the process involves the following steps:
- The assured files the claim and submits all required documents.
- An insurance adjuster estimates the cost of damage.
- The insurance company pays for the cost based on the coverage.
More specific steps are as follows:
- It is necessary that the assured inform their insurance company about the accident or damage to the vehicle as soon as possible. Insurance laws require this step from all drivers involved in car accidents.
Tip: If the damage to the vehicle is minimal, and the assured can shoulder the cost out of pocket, it is best not to file a claim. This can mean huge savings in the renewal of policy coverage or getting a new car insurance policy.
- The assured confirms with the representative of their insurance company the documents to submit relative to the claim. For instance, if the claim is for personal injury, the assured may need to submit proof of medical treatment and official receipts on top of the basic documentary requirements such as police reports.
- File the claim immediately. It helps that you know the time frame for filing the claim and submitting the required documents. As a general rule, though, it is best that you file it as soon as possible.
- The insurance company may find the need to get in touch with the assured to process the claim. Give the representative the information they need. If a representative from the insurer of the other party contacts the assured, one has to verify legitimacy before giving information. It is also best to document everything.
- Wait for the approval of the claim. The insurance company will send an adjuster to evaluate the damage and estimate the cost of repair. The assured can now send the vehicle to a car repair shop. The insurer takes the responsibility of paying for the cost of repair and other expenses depending on the policy coverage.
How To Pay For Car Insurance Policy
The assured have several options to pay for the cost of their car insurance premium. These options are the following: monthly payment, quarterly payment, and single payment of the annual premium.
As much as possible and if one’s budget conveniently allows, the assured is better off with choosing the annual premium payment. With this type of payment, one can save through discounts and zero cost of installment fees.
The monthly installment of the policy premium can add up to 30%+, which means that if the premium is $500 annually, this can increase to $550 based on a 10% monthly fee, or a premium payment of $45.83 monthly.
If the best option for the assured is to pay monthly despite the fees (i.e. interest), what one can do is to find an insurance company that waives the charges for monthly payment or does not charge interest for such type of payment.
However, the foregoing does not automatically mean the policy is the best buy. There are other factors to consider in determining if one is getting the best car insurance policy deal.
Another option to bring down the cost of monthly premium payment is to use one’s credit card and pay for the annual payment. Do this if the credit card offers a 0% interest free for monthly installments.
Typically, credit card companies offer a limited period of six (6) months. However, if one is choosing this route, the assured needs to have the discipline to pay their balances on or before due date. Otherwise, they might end up paying for more due to high interest.
Insurance companies usually receive payment in the following forms: credit cards, checks (wired, online, personal), money orders, and PayPal. However, it is best that the assured confirms with one’s insurance company the various payment types that they accept.
The assured can pay in several ways as well: through the official site of their insurer, payment via phone, auto-debit, and through mail. Again, it is necessary that one confirms with the insurance company how they can accept premium payments.
Discounts To Avail
Fortunately, car owners and drivers can avail of discounts when buying their policy that will bring down the cost of premium. Here are some of these discounts:
- Bundled Insurance – This applies to the purchase of multiple policies from the same insurance provider or insurance bundles, such as auto insurance + home insurance.
- Security Gadgets or Devices – If the owner installs gadgets that will increase the security of their vehicles and reduce the risks (e.g. anti-theft device)
- Safety Features – Discounts apply to vehicles that have features that promote the safety of the motorists and their passengers such as airbags and seatbelts.
- Clean Driving Record – If the assured has no record of accidents, this can qualify him for a discount.
- Low Mileage – Less mileage means less exposure to risk of road accidents.
- Full Premium Payment – Waives the fees that usually apply to monthly installments
- Paperless or Automatic Payment – When choosing auto-debit or electronic payment of the premium cost
- Loyalty Incentives – For sticking with the insurance company for a certain period of time, some insurance companies will also give discounts for renewal of policies.
Make it a point to ask insurance providers about the discounts you can avail before deciding to buy the policy.
Comparing Auto Insurance Quotes Online
The best way to get the best deal for car insurance policy is to compare quotes online. Doing this step will enable the assured to:
- choose the right type and amount of coverage
- benefit from the most reasonable cost of premium including discounts and mode of payment
Here are some of the benefits and advantages of getting car insurance quotes online:
- One can ask for and get the quotes anytime, anywhere as long as they can connect online. There are no business hours to observe, and therefore, no time boundaries in requesting for quotes. If one feels like asking for a quote at 4:00 in the morning, they can always do so.
- One can request for all the information they need without feeling constrained or pressured. It is more convenient and comfortable to get all the information when an individual does it online instead of face-to-face with an insurance representative.
- One can save time, money, and effort in getting their quotes. They do not have to go out of their homes, spend for gas and miscellaneous, and make an effort to visit different insurance companies to get their auto insurance quotes. All they need are their computers and a reliable internet connection.
In comparing quotes online, here is what an individual can do:
- Visit the official sites of car insurers and request for their quotes. Another way to ask for quotes is to visit a comparison website. Through this approach, one can get multiple quotes from various insurance companies without having to visit their websites one by one.
- Be sure to provide consistent information to maintain the reliability of the comparison. Check the accuracy of information before submitting online.
- Select the state of residence. Keep in mind that each state has its own rate of insurance. The sites will typically ask users to enter their basic information including details of the car they wish to insure. Make sure to have the information ready.
- Determine the type of coverage that is necessary. Make sure that coverage is sufficient. Most insurance websites including comparison websites will provide users with tools that will help them identify the type and extent of coverage that is most suitable in meeting their needs.
- Check for discounts. Often, some people are not able to benefit from discounts simply because they fail to ask. Reliable comparison websites will list available discounts, but users still have the option to contact the provider and ask for specific discounts.
- Compare the quotes. Avoid focusing on the premium alone. Just because one insurance provider offers the lowest premium does not mean that its policy is already the best deal. Look at the coverage, the claim processing, the available discounts, premium payment, customer service, and the guarantee of repair or replacement.
These are the essential things that one must know about car insurance. Use the information as a guide to avail of the right policy at the most reasonable cost possible.