What was your first car? Do you remember that feeling of ultimate freedom that you first experienced when you were able to start driving? It was exhilarating knowing that you didn’t have to depend on others anymore to get from place to place.
As a car owner, though, you get hit with the reality of operating a heavy piece of equipment. It costs money and it can be dangerous. For the very first time, you truly understood what insurance was for. Since it is illegal to not have car insurance, every car owner in America knows that when you get a car, you also have to get insurance.
But for a lot of people, it is hard to know what makes an insurance policy good. There are tons of different numbers and jargon that are hard to understand. What really matters when choosing auto insurance is understanding the basics.
Liability coverage
There are two main types of liability coverage that are part of an auto insurance policy. Bodily injury liability will cover the costs of any injuries that are a result of a vehicular accident caused by your car, no matter who is driving it. The other type is for property damage, which covers physical damage to either vehicles or other kinds of property like a house. These are required in every auto insurance policy in the country.
Uninsured motorist coverage
If you are involved in an accident with someone who is underinsured or has no insurance at all, this type of policy will protect you. Since they have no insurance to cover any injuries or damage that you or your vehicle incurred, then you will be left hung out to dry to pick up the financial burden. Having this type of insurance enables coverage for this type of incident so that you are not dependent on another’s insurance to be taken care of.
Medical payments or personal injury protection
This coverage is all about providing financial relief if an accident has caused you injury. It will help pay for any medical bills related to your recovery, and personal injury protection will even assist with any loss that comes as a result of your injuries, such as missing work or child care. Depending on what state you live in, coverage in this category may or may not be required. These plans are especially helpful for those with families.
Comprehensive coverage
This covers damages that may occur from specific events beyond your control, like hail or even theft. Although it may not fully cover the cost of the loss, it often comes into effect after a deductible is met. These types of policies could be ideal for people who live in places with extreme weather events or high-crime areas.
Collision
This coverage will help pay for the cost of damages to your car when you are hit by another vehicle or if you hit something. A big benefit of collision coverage is that it will pay no matter who is at fault for the accident. If you own a lease, the lender will often require collision coverage to be a part of your insurance policy.
How premiums are determined
Insurance companies are all about evaluating risk. They determine what is the likelihood that they will have to pay out for issues that occur and use that information to weigh the premium that you will pay for the policy. They consider many different factors, including your age, sex, the type of car, what year it was made, and even the color of the exterior. Your driving record will also be taken into account, and the cleaner it is, the more likely your premiums will be on the lower end.
What suits your lifestyle?
When choosing an auto insurance plan, it is important to take into account the kind of life that you lead. If you work from home and do not drive very much, that should affect the kind of plan you want to choose since there is a lower risk of getting into accidents. Additionally, where you live will make a difference as accidents are far more common in cities than rural areas.
Considering how you plan to use the vehicle should affect the insurance policy that you purchase to cover it. Not all policies are created equally, and not all insurance companies evaluate risk the same way. You can conduct your own research on what other people in similar circumstances have chosen to include in their plan to inform your decision, just make sure that at the end of the day, you are choosing the best plan for yourself. Don’t just buy whatever seems to be the cheapest, but find the best value that fits your needs.