Buying your first car is probably one of the most exciting experiences in your life. However, it is also the second biggest financial investment you will make, after your house, which is why you need to do what you can to protect it.
An effective way to do that is to purchase car insurance. Insuring your vehicle gives you financial protection against damages that can occur as a result of a car accident, protects you and fellow passengers during a collision, and cover medical expenses in case you or other people suffer injuries from the crash.
Depending on your preferences, there are several types of insurance coverage you can choose from. It is important to understand the purpose of each coverage and compare car insurance quotes so you can choose the insurance plan that best fits your needs and budget.
Here is a brief guide on the most common types of car insurance coverage.
Almost all countries around the world require licensed drivers to obtain liability coverage at the very least. The purpose of this plan is to protect other people on the road in case you cause an accident. If this happens, your liability coverage will cover all costs for the injuries and damages you have caused to someone else, up to your policy’s limits.
If you don’t have it, you will most likely pay for all the medical expenses and repair costs out of your pocket, which can add up to a pretty high sum. Plus, there is also the possibility of facing fines and other penalties if you are driving uninsured.
Unlike liability coverage, collision coverage is often optional. However, many insurance companies recommend drivers to obtain it because its main purpose is to cover all repairs your vehicle has endured in a car accident for which you are responsible.
Even if you are an excellent driver and didn’t cause the accident, there is a possibility that you will be partially at fault. In this case, you will most likely find yourself in a legal battle trying to prove your innocence, with high repair costs pending on the side.
But, with collision coverage, you won’t have to worry about paying expensive repair bills as your plan will cover everything.
Medical Payments Coverage
Medical payments coverage is in place to cover the medical expenses of any passengers or family members who have been involved in an accident while driving the insured vehicle.
This includes hospital visits, surgery, X-rays, and more. Medical payment coverage is required in some states and optional in others. In many states, the coverage can be added to a standard policy. In order to qualify for medical payments coverage, you need to have comprehensive collision coverage on your auto insurance policy.
The cost of the medical payments coverage can be included in your premium, or it can be added to your policy as a separate coverage. If the costs are included in your premium, you’ll typically pay a higher premium for this coverage.
If they are added to your policy as a separate coverage, you’ll typically pay less for them. If you’re considering adding medical payments coverage to your policy, make sure that it will cover all of the injuries and illnesses that you’re likely to incur.
Another common type of car insurance you should consider obtaining is comprehensive coverage. Commonly referred to as comp insurance, the purpose of this policy is to cover issues such as vandalism, theft, and damage caused by natural disasters. It usually goes along with the collision coverage as both policies fall into the physical damage category of car insurance incidents.
One misconception people often have about comprehensive coverage is that it pays for everything. However, this isn’t true because the policy can only cover damages that occur from non-collision accidents.
Personal Injury Protection Coverage
Mandatory in some countries, and optional in others, personal injury protection coverage is another common type of car insurance you should know about. The coverage is designed to pay for all medical bills, lost wages, and funeral expenses for you and your fellow passengers in case of fatal consequences during a car accident, no matter who is at fault. That’s why this coverage is often referred to as no-fault insurance.
In case the medical care exceeds the policy’s limits, then the health insurance sometimes covers further expenses. These policies usually have a per-person maximum, which means that the coverage can only cover a certain amount per person and not everybody involved in the accident.
Uninsured And Underinsured Motorist Coverage
Although most countries around the world require drivers to carry liability coverage, many people actually drive without it. This is where the uninsured and underinsured motorist coverage can come in handy and pay for all accident-related expenses.
The coverage kicks in if you get injured in a car accident or your vehicle sustains damages from another car whose driver is uninsured or underinsured. The policy will cover your own medical expenses and any car repair bills that come afterward. It is a relatively low-cost coverage and can be incredibly helpful on such occasions.
Obtaining car insurance is one of the most important things you need to do as a car owner. Purchasing the right coverage will provide you with financial protection against damages, injuries, and even legal battles that can result from severe or fatal car accidents.
However, in order to get the most out of it, it is important that you first learn about the various types of car insurance coverage available and choose the one that best suits your needs and budget.