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.
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:
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.
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.
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.
The process of filing an auto insurance claim may differ from one state to another. Nonetheless, the process involves the following steps:
More specific steps are as follows:
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 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.
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:
Make it a point to ask insurance providers about the discounts you can avail before deciding to buy the policy.
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:
Here are some of the benefits and advantages of getting car insurance quotes online:
In comparing quotes online, here is what an individual can do:
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.