Auto Insurance Basics – A Simple Guide
Every state in the nation requires that all drivers carry at least some auto insurance. It covers you and your other driver if you’re ever involved in a crash, at least in case you don’t have enough to pay for everything. But it’s important to have a good understanding on auto insurance basics, including how it actually works, coverage levels, and many more common terms used in insurance policies. So here’s what you need to know:
One of the most important auto insurance basics is to know your state’s minimum coverage levels. This will help you determine the amount of protection your premiums should provide. In order to qualify for “smoker” status in some states, you may also have to have anti-theft devices installed in your vehicle. Some states require you to have proof of safety training, others may not. Other states don’t require anything at all. So do your homework to figure out your state’s regulations.
Another auto insurance basic is the deductible. The deductible is what you’ll be responsible for without making any payments on a claim. The higher your deductible is, the lower your monthly premium will be. However, you must have adequate coverage to “pay” the deductible in case of an accident or other damage to your vehicle. You can choose the level of your deductible either high or low; the choice is up to you.
Auto insurance coverage types are another of auto insurance basics. There are several types of coverage, including collision coverage, personal injury protection, and comprehensive coverage, just to name a few. Most car insurance policies contain these sections.
Collision coverage pays for repairs to your car in the event you are in an accident, regardless of who is at fault. It’s important to note that collision coverage is usually required by law in many states, although you can get it voluntarily included in your auto insurance basics guide. Personal injury protection coverage pays for medical payments you may need following an accident, but the amount you pay for this type of coverage is deducted from your regular car insurance premiums. Comprehensive coverage is similar to collision coverage, except it also covers repairs to your car in the event of a flood, fire, theft, or other damage.
Your auto insurance coverage will also contain liability coverage, which pays for the other driver’s damages in case you cause an accident, as well as any medical payments you may need following an accident. This part of your coverage is mandatory in all states, but you can opt out of it if you prefer. Your auto insurance basics guide will explain this topic further, but in a nutshell, the minimum amount of liability coverage you must carry is the legal minimum and varies by state. The legal minimum amounts of bodily injury and property damage are also determined by state laws, so you should check with your local DMV. This part of your auto insurance basics guide usually explains how to make the minimal monthly payments to protect yourself financially in case of an accident.
Collision and comprehensive coverage are two other essential auto insurance basics that every policy holder should think about before shopping for coverage. These two types of coverage can be a little more expensive than your basic auto insurance, but you have many options for covering them. Collision only pays for the damage to your car in an accident, while comprehensive pays for damage to your car and other property. Depending on your state, you may also have an option for personal injury protection or temporary medical payments coverage, which may be useful if you have minor injuries in an accident, or if you incur medical expenses that aren’t covered by your auto insurance policy. While these optional benefits can be handy, you don’t have to choose between them. If you’re willing to spend a few extra dollars, you can get both collision and comprehensive coverage included in your auto insurance policy, making it a great deal all around.
When you’ve gathered together all of your auto insurance basics information, you’re ready to make an informed decision about which features and benefits are important to you. If you aren’t sure what kind of coverage you need for your particular situation, consult with an expert in the field. There are tons of options out there for everyone, and the more time you take to find the best policy for your needs, the less money you’ll spend in the long run.
