Auto Insurance – A Mandatory Necessity
Car insurance is good to have when you are in a car accident. But it does more than just provide financial assistance when you need it. Auto insurance also protects your assets when you are liable for an accident. This is one reason why most states require drivers to carry a minimum amount of liability coverage. The optional forms of coverage, such as protection following theft, extreme weather, and damage from collisions are just an added benefit.
You have many options when it comes to auto insurance. But some of the most common forms of coverage include:
1. Liability insurance for when you are found at fault for an accident. This coverage is mandatory in most states. This covers the repair or replacement of property you damage and medical expenses you cause to others.
2. Collision coverage pays for damage to your vehicle following a collision. It also pays if your car is beyond repair. This is highly recommended if you have a newer vehicle.
3. Comprehensive coverage protects you against non-collision damage to your vehicle. This includes damage from hail, theft, or striking an object.
4. Uninsured/Underinsured motorist coverage is for when you are involved in an accident with an at-fault uninsured or underinsured motorist. This prevents you from paying all your expenses out of pocket.
Some lesser known plans can include:
1. Personal Injury Protection to pay medical bills for you and your passengers. This is regardless of who is at fault.
2. Gap coverage pays the remaining balance of your auto loan if your vehicle is beyond repair. This means you can get a new car without paying for a car you no longer own.
3. Rental reimbursement coverage pays for a rental car while your vehicle is being replaced or repaired.
Paying the Deductible
When choosing auto insurance, you should take the premium and the deductible into account. The deductible is the out-of-pocket amount you pay when you make a claim. The insurer covers the remaining amount. If you make a claim for $1,000 and you have a $200 deductible, your insurance policy pays $800 of your expenses.