The constant need to pay for something every month may lead you to
question the true purpose of car insurance. Without a general
knowledge of car insurance, those who are fairly new to owning a car
may get frustrated at the high cost alongside what seems to be a lack
of return. Nonetheless, car insurance provides a number of benefits
for every driver and vehicle owner. This guide will cover everything
there is to know about car insurance and provide answers to some of
the most frequently asked questions.
What Is Car Insurance?
Car insurance, similar to any other type of insurance, is a
financially protective measure. You pay an insurance provider small
amounts on a regular basis and, in return, you have financial coverage
when an emergency happens. With regard to car insurance, you pay your
insurance provider so you can drive with peace of mind and know that
your vehicle will be covered in the event of an accident.
What Happens if I Have an Accident?
In addition to knowing what exactly car insurance is, you have to know
how accidents can affect it. The truth is that your car insurance rate typically goes up after
an accident. After an accident, you may notice an increase in your
premium for a variety of reasons. For one, you may be placed in a
higher risk pool; this means that your insurer will reassess your rate
of risk and may raise your rates depending on the circumstances.
Furthermore, a car accident will likely disqualify you for a safe
driver discount. Lastly, an erasure of premium benefits means that you
are no longer protected from an increase in the rate the second time
around. Something else you need to be aware of when it comes to car
insurance and accidents is your deductible. Deductibles are an
out-of-pocket cost that you will be responsible for if you file a
claim with your insurance. The higher your deductibles are, the lower
your premiums will be. If you want to be responsible for the lowest
possible out-of-pocket expense in the event of an accident, you can
pay a higher monthly premium.
A comprehensive guide for car insurance would never be complete
without introducing to you some of the basic types of car insurance.
By identifying different types of coverage, you are better equipped to
choose the right one for you. Furthermore, going through this list
will give you ample knowledge as to how each works and which policy
would benefit you the most. Here are the different types of car
Liability coverage is fairly easy to understand. If you are at fault
for a car accident, it is your obligation to cover the car repairs of
the other driver. If you have liability insurance, your insurance
provider will pay these obligations on your behalf. If you have
liability only, your car repair expenses and medical bills are not
covered by your insurance company.
Bodily Injury Liability
One of the sub-categories of liability coverage is bodily injury. This
type of liability insurance is required by law in most states. If you
are at fault for a car accident that injures another person or driver,
this liability coverage will help in paying for his/her medical
expenses and a loss in income due to his/her injury. Furthermore,
bodily injury liability insurance can also aid in paying for any legal
fees if you are sued.
The second sub-category of liability coverage is property damage. This
type of liability insurance is quite similar to bodily injury
liability, with the only difference being that it focuses on property
damages rather than bodily injuries. Whether it is another car or
another person's property, this type of coverage can help with the
Uninsured or Underinsured Motorist Coverage
This type of insurance comes into play if you are in an accident where
the other driver is at fault and s/he does not carry any type of car
insurance. If this occurs, you can file a claim with your own insurer
up to the limit of your uninsured driver coverage. Underinsured driver
coverage can be used the same way. The difference with underinsured
coverage is that the driver at fault does have some coverage, but it
is not sufficient to cover all of the damages.
Personal Injury Insurance
Personal injury insurance, also known as PIP or personal injury
protection, typically covers your medical expenses and lost wages.
This type of insurance is also referred to as no-fault coverage
because it pays out the claim, regardless of which driver was at
fault. If you’re in an accident and you have PIP, you can still
receive the benefits, no matter who is at fault. This type of
insurance also covers service replacement of someone injured in a car
accident, rehabilitation costs, and funeral costs.
Collision insurance covers the repair or replacement of your vehicle
if you are involved in an accident with another vehicle or an object,
such as a tree or a fence. It also covers single vehicle accidents. On
another note, this insurance does not cover damages not related to
driving, damages to another person’s vehicle, and any medical
bills, whether they are yours or someone else’s. Collision
coverage is likely required if you owe money on your car or have it
leased. If your car is paid for in full, you can choose whether or not
you carry collision insurance. You should consider how much it would
cost to replace or repair your car in the event of an accident when
deciding whether or not to carry collision insurance.
Comprehensive insurance is considered one of the highest forms of
protection that a driver can get. Comprehensive car insurance helps
cover the cost to repair or replace your vehicle if it’s stolen
or damaged in an incident that is not a collision. Comprehensive
coverage would cover damage from fire, vandalism, falling objects, or
natural disasters. Like collision insurance, if you owe money or have
your vehicle leased, comprehensive coverage is likely required by your
lien company. If your vehicle is paid in full, you can choose whether
or not you carry comprehensive insurance.
Medical Payments Insurance
This type of coverage is part of an auto insurance policy and may help
pay your or your passengers’ medical expenses in the event of an
auto accident. This type of insurance can be implemented regardless of
who caused the accident. It may cover hospital or doctor visits,
surgery, x-rays, prostheses, ambulance, medical technician expenses,
professional nursing services, and health insurance deductibles. Keep
in mind that this type of coverage is optional and is not available in
Rental Reimbursement helps cover the cost of transportation, whether
you rent a car or take public transportation, while your vehicle is
being repaired after an insurance claim. This type of coverage does
not apply if you need to rent a vehicle to be used while on vacation
or if your vehicle requires routine maintenance work. Rental
reimbursement only applies if your vehicle is involved in a covered
Roadside Assistance Coverage
Roadside assistance coverage is a type of coverage that can help when
you have car trouble, whether you’re at home or on the road.
Adding roadside assistance coverage to your insurance plan comes with
several benefits: towing, lockout service, extrication, flat tire
service, fuel delivery, and battery service. Roadside assistance is an
option that may be available to add in with your auto insurance policy
or purchased separately.
Do I Need Car Insurance?
You need car insurance for a variety of reasons. For one, liability
insurance is a legal requirement and some states require drivers to
have both property damage liability insurance and uninsured or
underinsured motorist coverage. Not only is some coverage a legal
requirement, but it also gives you peace of mind on the road. In the
event of a car accident or damage to your vehicle, having insurance
will give you the ability to cover these unexpected expenses.
What Are the Car Insurance Requirements by State?
Minimum car insurance is what meets the legal requirement in the
United States. When shopping for an auto insurance policy, you have to
be aware of your state’s minimum car insurance requirements.
Most of the time, this includes the four basic types of insurance
– bodily injury liability, property damage liability, no-fault
insurance, and uninsured or underinsured coverage.
Here are the states with a minimum of $25,000 bodily injury liability
coverage per person and a $50,000 bodily injury liability coverage per
Property damage liability coverage is widely varied among the
different states. With that in mind, here are the states with a
minimum of $10,000 property damage liability coverage per accident:
This is the list of states that require a higher property damage
liability of $15,000 coverage per accident:
Here is the list of states that require a much higher property damage
liability coverage of $20,000 per accident:
Here are the states with a $25,000 property damage liability coverage
How Much Coverage Do I Need?
When buying an insurance policy, you need to remember one important
question: “How much coverage do I need?” You can easily
answer this question by taking into consideration three things: your
state’s minimum requirements, the cost of your premiums, and the
total value of your assets.
The first thing to keep in mind when choosing auto insurance coverage
is your state’s minimum insurance requirements. You can find
minimum insurance requirements above or by searching the Motor Vehicle
Department website for your state. You must be sure that you carry
enough coverage to meet the minimum requirements in your state.
When you shop for car insurance, you should consider the cost of your
premiums and your deductible. If keeping your monthly premiums as low
as possible is important to you, it may make sense for you to choose a
higher deductible. Remember, a low insurance premium may lead to a
better credit score over time.
Lastly, when deciding how much coverage you need, you should consider
the total value of your vehicle. You will want to be sure that you
have enough insurance coverage to protect yourself financially. You do
not want to choose policy limits that are lower than the total value
of your vehicle. Furthermore, if you have aftermarket parts or
customizations that are worth more than the cost to replace your
vehicle, then you may want to consider taking out additional coverage
on those items.
Speaking to an Agent
All of these things are important to keep in mind when purchasing auto
insurance. Not only is car insurance a legal requirement, but it also
adds to your credibility as a driver and offers financial protection
in the event of the unexpected. We get it, buying insurance can be
confusing and it’s easy to make a mistake when it comes to
shopping for coverage on your own. That’s why we created this
guide. We hope this information helps make buying insurance easy and
answers any questions you might have about auto insurance. Don’t
let buying insurance be overwhelming. Contact your
local Acceptance Insurance Agent
today and let us guide you through the process.