By definition, liability car insurance is meant to cover damages caused by your vehicle to another person. It becomes useful when you have caused an accident. This is considered as one of the most basic and necessary car insurance coverage items. Of course, liabilities can take care of few other options too. The minimum liability limits differ from state to state. There are two different types of liability coverage:
- Liability would take care of all the injuries. This is also known as bodily injury liability.
- Liability would pay for the other person's damages. Apart from vehicle damage, the following are covered: fences, telephone poles, lamp posts, buildings and car structure.
As suggested by its name, collision insurance coverage pays the cost to replace or repair a vehicle damaged in an accident. This is an optional car insurance coverage. The amount paid by the service provider doesn’t include the deductible. Collisions can be with any object like a tree or guardrail. There are many benefits in opting for collision coverage:
- You don’t have to pay a lot of money for repairs or replacements from your pocket.
- Collision coverage along with deductible funds will make sure you pay for nothing.
When you decide to opt for collision coverage, you must be careful with the deductible. This is the amount you should pay from your pocket. The deductible depends on many factors:
- Cost of your car.
- Age of your car.
- The cost of each repair or replacement.
- Your willingness to pay for each damage.
Comprehensive insurance coverage helps in repairing or replacing the vehicle if it is damaged or stolen. This insurance policy covers everything but collision. For example, comprehensive coverage takes care of vandalism, damage from fire or falling objects. In fact, damages caused to your car by civil disturbances, natural disasters and animals are covered by this insurance. Comprehensive coverage doesn’t cover the following:
- Medical charges after a car accident.
- Damages caused to your car.
- Injuries caused to another person by an accident.
When you buy comprehensive insurance coverage, you must be aware of the deductibles. This is the amount you would spend out-of-your-pocket. Every comprehensive coverage has its limits. This is the maximum amount offered by the policy. The limit is often equivalent to the “cash” value of your car. If a vehicle covered by comprehensive insurance policies is stolen, you will receive the car’s depreciated value.
Before you opt for comprehensive coverage, you must focus on the following:
- How old is your car?
- Are you planning to finance or lease the vehicle?
- What is the annual premium for collision and comprehensive coverage?
Personal Injury Protection
Personal injury protection helps people who get injured by a collision. This insurance coverage is not offered in many states. However, the policy is very useful! A lot of people replace PIP with healthcare coverages. But, your healthcare plan will not be helpful at all times. Health insurance policies have limits and deductibles. On the other hand, PIP can pay beyond limits and deductibles when you are hurt in an accident. The coverage will help you with the following:
- Funeral expenditures.
- Loss of job or services!
- Loss of monthly income!
If your state offers personal injury protection, you must be aware of its requirements. Also, check if you can afford PIP coverage. Most PIPs come with high premiums and high deductibles. So, decide if you really need the coverage and its benefits.
Uninsured /Underinsured Motorist Protection
What would you do if you are in a severe car accident and the fault is not yours? What would you do if the other car is not insured? In such situations, the uninsured motorist protection policies will be useful. This policy will help you save lots of money! The policies will cover your medical bills and vehicle damages.
On the other hand, underinsured motorist coverage will pay if you are hit by a driver who is underinsured. Often, uninsured and underinsured policies are bundled together. They can be bought as a single protection kit. Underinsured motorist coverage handles the following situations:
- The other driver’s policy has low liability limits.
- The other driver’s insurance is not sufficient to cover the bills of an accident.
The need for uninsured/underinsured motorist coverage depends on many factors. Often, it depends on your location, age and local laws.
How to bag insurance at a low cost
Most homeowners have multiple cars. And, car owners are expected to renew insurance policies every year. If you have show-, seasonal- or special- cars that are driven during special occasions, you must consider multiple vehicle discounts. All your vehicle policies can be consolidated to a single one. This will make your car insurance cheaper. In fact, multiple discounts can be added to your policies to reduce the premiums.
Safe Driver Discounts
Some states have “Blackbox Policies”. In this policy, the insurer would install a device to monitor your driving skills. People who stick to road rules and follow safe driving styles will be rewarded. These devices are known as “Telematics”. Telematics can record the following:
- How often do you drive on dangerous roads?
- How aggressively do you accelerate?
- How aggressively do you brake?
- How fast do you drive?
- How careful are you on the road?
Careful drivers will receive the “Safe Driver discounts”.
Safe Vehicle Discounts
Throughout the country, safe cars are offered “Safe Vehicle Discounts”. As suggested by its name, these discounts are meant for cars with advanced safety features. Fitting an immobilizer, approved alarm system or tracking kit will give you 5% discount on insurance. Most modern vehicles are designed with these features. So, check if your new car has it! And, if it does, don’t forget to declare it!
Good Student/New Driver
Good students with sound educational records will receive amazing discounts. For example, students with an “A” average or honors will receive at least 15% discounts. These discounts differ from state to state. Additionally, they must drive safely. Traffic offenses can cancel these discounts.
Laws Car Insurance
DUI is a serious offense and it can affect your car insurance premiums. If you are charged against DUI, it will be an expensive case (without the SR-22 costs). The impact depends on many factors. In general, your age, total number of DUI cases, duration between DUI charges and driving habits will affect your car insurance. By comparing several policies, you may get a cheap deal. However, it would be wiser to start a new driving record to make your rates normal and low.
Age Limit Laws
Car insurance premiums are calculated by service providers. If you are below 25 years of age or over 60 years of age, you will receive a big premium. This might appear like “abrupt” age discrimination. However, new drivers are believed to be dangerous than older, experienced ones.
Credit Score Laws and Regulations
By definition, credit scores can be used to measure your overall creditworthiness! It states if you are likely to repay a debt or not. And, credit scores influence car insurance premiums directly. When compared against many other factors, credit scores have a bigger impact on car insurance premiums. For example, people with poor credit scores must be prepared to pay at least 150 USD more! In some states, your premiums can increase by a thousand dollars.
A lot of car owners are afraid to claim, because they worry if premiums would increase automatically. In addition to claims, service providers consider many factors before increasing premiums. This includes the following:
- Severity of accident.
- The driver at fault.
- Your value to the insurance company.
Filing a claim is important. You don’t have to worry about high insurance premiums!
Verification of Insurance
Before you buy a car insurance policy, you must verify it! Verification will help you find and filter policies in a cost-effective manner. Here are few ways to verify a policy:
- Come in touch with skilled and experienced service providers.
- Get at least three quotes from different companies.
- Study the policy! Understand what it covers, the premiums and deductibles.
- Talk to customers with similar car insurance policies.
- Go through BBB for more information about the car insurance provider.
On the whole, car insurance is mandatory! Driving without the right kind of car insurance policy is illegal. With car insurance, you will be able to offset the loss of a huge amount of money. Survivors, vehicle damage and other bills will be covered by the car insurance policy. And, if you have never made a claim, you will receive the no-claim bonus!