Many states require basic auto insurance for yourself. It offers some financial security in the event of an accident. But is it sufficient? What are the alternatives? Find out how car insurance is done and what kinds of coverage are offered.
Understanding auto insurance—the basics
A contract for auto insurance is with the insurer, which will protect you from any financial losses that might occur in the case of an accident or theft. In exchange for paying a monthly premium, the insurance company agrees to compensate you for your losses by the terms stated in the policy.
A majority require personal auto insurance for the basic needs of U.S. states, and the laws differ. Insurance policies are priced per policy (a per-carte), allowing you to tailor the coverage amount to your needs and budget.
The policies are typically issued for one-year or six months intervals and can be renewed. The insurance company provides an email when it’s time to renew your policy and to pay the cost.
Who’s covered by my auto insurance, and under what conditions?
Your auto policy will protect your family members and you as well as any other relatives who are covered by your policy, regardless of whether they are driving your vehicle or else’s (with their consent). The policy also covers anyone who isn’t covered by your policy is driving your vehicle with your permission.
The policy you have on your personal vehicle only will cover your personal driving regardless of whether you’re driving for work or running an errand, or making a journey. It won’t cover you when you drive for commercial reasons, such as when delivering pizzas.
Personal Ontario car insurance calculator by stingypig.ca may be ineffective when you use your vehicle to transport others using a ride-sharing service like Uber and Lyft. Some insurance companies have begun offering insurance options (at an additional cost) that provide coverage to drivers who offer ride-sharing services.
Are auto insurance policies mandatory?
Insurance requirements for autos differ between states. If you’re financing your car, the lender could have their requirements. In nearly every state, the owners of cars have:
- Bodily liability for injuries is insurance that covers expenses resulting from the death or injuries caused by another driver, or you cause while driving your vehicle.
- Damage to property liability reimburses other people for any damage that you or a driver in your vehicle causes on another car or property, like the fence, building and utility pole.
In addition, several states require you to be armed with:
- Medical payments, also known as insurance for personal injuries (PIP), will reimburse medical expenses related to injuries sustained by the passengers or you. Also, it covers the loss of wages as well as other costs.
- Coverage for uninsured drivers covers you when an accident occurs due to an individual who doesn’t have insurance on their vehicle or in the event of an accident that is hit-and-run. It is also possible to purchase insurance for underinsured motorist insurance, which covers the cost if the other driver is not insured to cover the expenses of an accident that is serious.
Even if PIP and uninsured motorist insurance are not required in your state of residence, think about including them in your insurance to provide greater financial security.
What other forms of coverage for auto insurance are common?
Although most of the basic, legally-mandated auto insurance policies cover the damages that your car can cause, they will not cover damages to your vehicle. If you want to protect your car, it is recommended to consider these additional coverages:
- Collision compensates you for any damages to your vehicle that results of collisions with other vehicles or an object–e.g., trees or guardrail–if you’re the one to blame. Although collision coverage won’t pay for mechanical breakdowns or wear and tear on your vehicle, it can pay for damage caused by potholes or the result of rolling your car.
- Comprehensive gives protection against damage and theft caused by events other than collisions, for example, flooding, fire vandalism, hail, falling trees or rocks, and other hazards, even getting struck by an Asteroid!
- Glass Protection covers windshield damages, which is typical. Some policies have no-deductible glass protection, covering rear windows, side windows, and glass sunroofs. You can also purchase supplemental glass protection.
How do I get gap insurance? Why should I get it?
Comprehensive and collision insurance only will cover the value of your vehicle and not the price you paid for it. And new vehicles appreciate quickly. If your vehicle is damaged and/or stolen, you could be there is a “gap” between what you have to pay for the car and the insurance coverage. To make up for this you could consider buying gaps insurance to cover the difference. When leasing a vehicle the gap coverage is typically included in your lease payment.