Car Insurance

Car Insurance: Why It’s Needed And Five Reasons To Shop Around For It

When you have a driver’s license and plan to get a car, it’s important to know that you are going to need car insurance for that vehicle. It’s no longer a luxury; it’s now a requirement that all drivers who operate a motor vehicle must have auto insurance on their mode of transportation.

However, many people don’t understand the concept of auto insurance and why they really need it. They don’t understand that auto insurance is a safety net for them even when they have to shell out money each month, every six months or once a year to pay for the bill.

So what is car insurance? This is insurance you purchase against a motorized vehicle in your household to protect yourself against a loss that occurs due to a traffic accident as well as protection against any liability for an accident.

Most people know that there are two kinds of car insurance policies they can get: liability coverage and full coverage. However, there are some common misperceptions on what liability coverage will cover in the event of an accident and as the policyholder, it is your job to know exactly what your insurance carrier will cover and what you may need to purchase as extra.

Liability Auto Insurance

What is liability insurance? This kind of insurance policy covers only damage inflicted by you to another vehicle/person. This leaves you and your vehicle completely unprotected in the event you have a one-car accident. Many states and insurance companies require a policyholder to retain at least a 25K/50K/25K liability policy. This means the policy will cover up to $25,000 of personal bodily injury, $50,000 bodily injury per person and $25,000 property damage. However, each state is different when it sets the amount of coverage needed to carry liability so make sure you check out your state’s requirements.

Liability coverage policies are always less expensive than full coverage but it’s best to fully protect yourself when you have liability insurance buy purchasing uninsured motorists on your coverage. Uninsured motorists coverage protects you when another motorist hits you and does not have an insurance policy. Your policy will take up the slack and will go after the person financially.

Full Coverage Auto Insurance

What is full coverage insurance? Full coverage insurance is just as its name implies. It will cover all damages to your vehicle and other vehicles involved along with injuries sustained. Some people may know this as comprehensive and collision coverage. However, comprehensive and collision insurance coverage are actually separate parts to a full coverage policy. Comprehensive coverage usually covers vehicles that have been damaged by fire, weather damage, theft, etc. Collision insurance typically covers everything that would not be your fault such as a run in with an animal. If you purchase a vehicle from a dealer, it’s required that you have full coverage with collision and comprehensive coverage.

Five Reasons To Shop Around

When you are out looking for car insurance, you have to keep these five things in mind if you want to get the best deal from an insurance policy/company.

First, shop around for the best deal. Never settle on one company until you review all companies and their quotes.

Second, ask for discounts. If your car insurance company asks about your college education (as some do), you could get a big discount for being a college graduate. Don’t forget multiple car insurance discounts and anti-theft device discounts. There are many more discounts out there so take advantage of it.

Third, consider how old your vehicle is. If it’s older than five years old, you may want to downgrade to liability with uninsured motorists unless you travel often.

Fourth, determine which company has the best liability and full coverage insurance for the lowest amount you can go with. If you can find a higher liability amount the company will cover for the same amount as another policy for a lower amount, then you’d be better off with the higher amount just to cover your bases.

Fifth, make yearly checks with your auto insurance coverage and determine if it’s still the right insurance provider for you. This is especially true if your insurance premiums are going to go higher.

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