What is car insurance?
Understand your car insurance and what it covers
Basic personal insurance is approved by many states and provides financial protection in the event of an accident. But is it enough? What are the options? Learn how car insurance works and what types of coverage are available.
Understanding car insurance – basics
Car insurance is a contract between you and an insurance company that protects you from losing money in the event of an accident or theft. In order to pay your premiums, the insurance company agrees to pay your losses as set out in your policy.
Automatic insurance provides:
• Property – such as damage or theft of your car
• Liability – your legal responsibility to others for damages or damage to property
• Medical aid – the cost of treating injuries, rehabilitation, and sometimes loss of income and funeral expenses
Basic personal insurance is approved by most U.S. states, and the rules vary. Automatic insurance covers are sold separately (a la carte) to allow you to customize the insertion prices to fit your specific needs and budget.
Policies are usually issued for a period of six months or one year and are renewable. The insurance company sends a notification when it is time to renew the policy and pay your premium.
Who pays for my car insurance – and under what circumstances?
Your default policy will include you and other family members in your policy, whether you are driving your car or someone else’s (with their permission). Your policy also provides coverage if someone outside your policy is driving your car with your permission.
Your personal policy only includes personal driving, whether you go to work, do something or take a trip. It will not give you coverage if you use your car for commercial purposes – for example, when you bring pizza.
Personal insurance and will not provide coverage if you use your car to provide transportation for others with a travel sharing service like Uber or Lyft. Some car insurers, however, now offer additional insurance products (at an additional cost) that extend the coverage of car owners who provide travel sharing services.
Is car insurance compulsory?
Car insurance requirements vary from country to country. If you finance a car, your lender may have his own needs. Almost every province requires car owners to carry:
• ****** Injury liability – which covers the costs associated with an injury or death caused by you or another driver while driving your vehicle.
• Property damage debt – which pays for the damages you or another driver uses for your vehicle causing another vehicle or other property, such as a fence, a building, or a support pole.
In addition, many states require you to manage:
• Medical bills or personal injury protection (PIP), which provides reimbursement for medical expenses for your injuries or for your passengers. It will also cover lost wages and other related expenses.
• Unconfirmed reckless driving will reimburse you if the accident is caused by a driver who does not have car insurance – or in the event of a collision and running away. You can also buy under the cover of insured drivers, which will cover costs when another driver does not have enough availability to cover the cost of a major accident.
Even if PIP and the availability of uncertified drivers are voluntary in your province, consider adding them to your policy for financial security.
What are some common types of car insurance coverage?
Although basic car insurance, which is legally authorized, covers the damage caused by your car, it does not cover the damage to your car. To cover your car, you should consider the following clothing options:
• A collision reverses you from damage to your vehicle as a result of a collision with another vehicle or object – eg a tree or a guardrail – if you make a mistake. While collision coverage does not reverse the mechanical failure or normal wear and tear of your vehicle, it will cover damage to potholes or rollover your car.
• Complete provides coverage for theft and damage caused by the event without collisions, such as fire, flood, destruction of property, hail, falling rocks or trees, and other hazards – even an asteroid crash!
• Glass Coverage provides coverage from air damage, which is common. Other car policies include non-slip glass coverings, including side windows, rear windows, and glass sunroofs. Or you can buy an extra glass cover.
What is gap insurance and do I need it?
Collisions and consolidation cover only the market value of your car, not what you paid for – and new cars are declining rapidly. If your car is stolen or stolen, there may be a “gap” between your car debt and the availability of your insurance. To cover this, you may want to look into buying gap insurance to pay for the difference. Note that for rental cars, gap coverage is often included in your rental payments.