Understanding Car Insurance And Why You Need It – Top 10

We live in a world where no one can predict what will happen tomorrow. It’s a world full of risks. The risks include loss of life, physical injury, among others. While preventing these accidents is not always possible, financial companies have come up with ways to compensate people financially.

Examples of such financial institutions are auto insurance companies. For anyone who owns a vehicle, car insurance is very important to have.

What is car insurance?

Auto insurance refers to an existing contract between you and an insurance company that protects you against any financial loss in the event you have an accident, your vehicle is damaged, or your car is ever stolen.

How does car insurance work?

You need to find an insurance company that offers car insurance and then pay them a premium. This car insurance company then agrees to pay you for any losses, depending on the policy you have chosen.

Why do you need car insurance?

There are so many reasons why a car owner needs insurance. Some of them include:

Auto insurance protects you and your family

Remember that your family members always depend on you and are entitled to the car you own. They’ll be driving it too, so it’s important to protect them from any financial hardship that could come from owning that car should anything unusual happen.

Car insurance reduces your stress level during difficult times

We can never say what lies ahead. Drivers and passengers sometimes face unforeseen tragedies. They include injuries, accidents and many others that can make you emotionally stressed. So car insurance reduces this stress so you can focus on getting better and rebuilding yourself.

Auto insurance gives you financial security

You may be very well off today, but you don’t know what tomorrow has in store. The unexpected can happen suddenly and put you in a worrying state financially when it comes to your car. Car insurance usually pays out in the event of unforeseen car incidents.

Auto insurance gives you much-needed peace of mind

Nothing can ever replace the importance of your health. However, you can rest easy knowing that should something happen to you while you are driving your car, your insurance will help you with financial security.

What are the types of car insurance you can get?

There are different types of car insurance. They contain:

Liability Auto insurance


•Pays for the victim’s damaged property •

Covers the victim’s medical bills

•Does not cover your injuries

•The amount paid has a limit

•You pay out of pocket if you exceed the limit

•Limit depends on insurer

This type of car insurance is especially helpful if you default in a car accident. It covers the financial damage to the other party.

This car insurance is a combination of both personal injury insurance and property damage insurance.

The auto insurance company pays the cost of the injuries first and then pays for the damaged property as their specific names indicate.

In many places, in order to even drive, you must have some kind of liability coverage. It is either that or some other form of financial responsibility guarantee.

This is only fair because it ensures that any driver who in some way harms anyone or anyone who damages property on the road will compensate the injured or affected party.

When you go to buy this type of car insurance, the limits are broken up into the three numbers known as split limits.

The split limits of these car insurance policies tell you the maximum amount that can be paid in case of bodily injury for one person, for all the persons involved in the car accident and property damage respectively.

Should there be any damage that exceeds the limits stated in this car insurance policy, you will pay for it out of pocket.

Liability for Bodily Injury


• Covers the victim’s medical expenses

• Covers the victim’s lost income

•Covers your legal costs

•Subject to a limit per person

•Subject to a limit per accident

This auto insurance policy is the most common, as it is the one that covers you in case you are the cause of an accident that kills or injures other people.

Your auto insurance company will then be responsible for paying all medical expenses of the other party involved. They also cover any lost wages and any funerals

The other benefit is that it also covers legal costs if the other party decides to sue you.

Property damage auto insurance


•Covers damage to the victim’s vehicle/property

•Does not cover damage to your property

•Subject to a limit

•You can choose your desired limit

•The higher the limit, the higher the premium

This car insurance policy covers any kind of damage to other people’s property. For example, if you ran into someone’s house or the back of someone’s vehicle, property damage insurance would cover you.

The amount of property damage usually paid by each driver depends on where they live. While you may find it tempting to pay only the minimum coverage, keep in mind that any damage the cost of which exceeds your auto insurance limit will be paid out of pocket.

You should also know that this type of car insurance does not cover your car.

Personal injury car insurance


•Has collision insurance

•Has comprehensive insurance

• Collision insurance covers the repair or replacement of your vehicle

•Comprehensive insurance covers all types of damage except collision

•You must choose a deductible amount

When you hit someone else’s vehicle or hit something that damages your car, this type of auto insurance will cover the cost of repairs.

There are two types of coverage when it comes to physical damage car insurance. They include collision and comprehensive, the difference of which is based on the circumstances under which your car was damaged.

Collision car insurance – this coverage pays for repairs to your vehicle in case you are the one who caused the accident. Often the blame is placed on the driver, even if it wasn’t, the auto insurance company will pay for the repairs while trying to prove you were innocent in an effort to get a full refund.

Comprehensive car insurance – this insurance covers things like theft, damage from natural causes or disasters, and vandalism. This car insurance generally covers the physical damage that is not covered by collision coverage.

This auto insurance policy includes a separate deductible that you must pay yourself for each such incident before the auto insurance company steps in to cover the rest.

This deductible differs per car insurer. The amount you choose for deduction has a major impact on your premium.

Rental car insurance


• May include liability coverage

• May include comprehensive coverage

•May include collision coverage

Some car insurance companies extend their insurance coverage to rental cars. Be sure to check this carefully before renting the car.

What is the most important car insurance policy to have?

The most important car insurance policy is liability and property damage insurance. Unfortunately, if you are involved in a car accident, you risk losing your driver’s license completely if you don’t have it.

If you get into an accident without this, you could also face hefty fines and damage bills.

By b5hya

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