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In today’s world, cars are not just a way to get from one place to another. They can be a sign of status, a source of pride, or even an extension of the person driving it. No matter your relationship with cars, you need auto insurance to protect you from financial loss in the event of an accident or other covered misfortune.
If you own a car, leasing a car, renting a car, or drive someone else’s car regularly, it’s important that you understand everything about auto insurance and how it works.
Auto insurance is not just about having something in case of an accident; it’s about protecting yourself from the financial risks that come with owning and operating a car. Let’s take a look at what auto insurance covers and its different types.
What is Auto Insurance?
Auto insurance is a type of insurance that protects you from financial loss if you are involved in a car accident. In addition, it can also protect you if your car is stolen or damaged in a flood. The two main types of coverage you will find in any standard auto insurance policy are liability coverage and collision coverage.
- Liability coverage pays for damages that you are legally responsible for, like if you cause an accident and the other driver sues you.
- Collision coverage pays to repair your car if you get into an accident and your car is at fault. While collision coverage is mandatory in some states, liability coverage is always required.
Other types of coverage, like uninsured/underinsured driver coverage and comprehensive coverage, are optional and are designed to protect you in certain situations that aren’t covered by regular liability and collision coverage.
Auto Insurance Quote
If you are shopping for a new car insurance policy or are trying to figure out if your current insurance covers everything you need it to, you will probably need to get a quote. Getting a quote for auto insurance is easy and can be done online, over the phone, or in person at an insurance agent’s office.
When you get a quote, the insurance company will give you an idea of how much your monthly payment will be and how much your insurance will cost for the year. Getting a quote is not the same as purchasing insurance, but it will give you a good idea of what your insurance will cost so that you can make an informed decision.
Personal Auto Insurance
Personal auto insurance is the most common type of auto insurance and covers the policyholder and any passengers in their car, as well as the car itself. This type of policy is suitable for most car owners and is the most basic type of auto insurance policy.
Standard auto insurance policies will cover any accident that is caused by the policyholder or any passengers in the car, regardless of who is at fault. This means that if you get into an accident and it’s determined that you are at fault, your insurance will cover the damages to the other car. If someone else gets into an accident and their car damages your car, your insurance will cover the damage.
Standard Auto Insurance
Standard auto insurance is a policy that provides a level of coverage that is considered standard or average. This type of policy is designed to protect you against all of the most common types of auto accidents, including accidents that you cause. Standard auto insurance policies usually cover damages to you or your car and any other cars involved in an accident as well as injuries to the passengers in all of the cars.
They also usually cover damage to the other driver’s car if you have an accident caused by the other driver that injures you. Depending on your state’s laws and the terms of your policy, your standard policy could also cover damage to other things if they are involved in an accident, including the road itself.
Collision and Loss-of-Value Insurance
Collision insurance covers the damages to your car if you get into an accident caused by you or others. Loss-of-value coverage kicks in if your car is damaged and its value decreases or depreciates as a result of the accident.
This type of insurance is not required in all states or by all insurance companies. Loss-of-value insurance is optional coverage that takes care of the loss in value that your car experiences as a result of the accident.
This coverage is often offered as part of a comprehensive auto insurance policy. Collision coverage normally covers the cost of repairing or replacing your car. Some insurers will also offer you an option to include coverage that will pay the difference between what your car is worth before the accident and what it’s worth afterwards. This coverage is often referred to as loss-of-value insurance as well.
Fire and Theft Insurance
Fire and theft insurance are two separate types of policies that can be added to your standard auto insurance policy. Fire insurance protects you if your car is damaged or destroyed by fire. Theft insurance protects your car from theft and vandalism.
These two types of coverage are optional but can be a good way to protect yourself in situations that are not covered by a standard auto insurance policy. Fire insurance only covers damage caused by fire, not hail or flood.
Theft insurance pays to repair or replace your car if it’s stolen, but it’s important to know that most policies won’t pay if a person just steals your car and drives away.
Roadside Assistance and Towing Coverage
Roadside assistance coverage pays for services like towing, tire inflation, fuel delivery, and unlocking your car if you get stuck on the side of the road. Towing coverage is one part of roadside assistance that covers the cost of towing your car to the nearest repair shop.
- Roadside assistance coverage is optional coverage that is often paired with towing coverage. Towing coverage can be purchased as its own policy or as a part of a roadside assistance policy.
- Towing coverage only covers the cost of towing your car to the nearest repair shop. These two types of coverage are optional, but most drivers will want to have them. In addition to protecting you when you get stuck on the side of the road, they also protect you from being scammed by people who think you are in a hurry and offer their “help” without charging you.
Exclusionary Insurance Policies
Exclusionary insurance policies are the opposite of standard and broad policies. An exclusionary policy is designed to cover all of the most common types of accidents and injuries but exclude the most common types of losses. An exclusionary policy is usually more expensive than a standard policy because it covers fewer types of accidents and injuries, but it also provides less coverage.
If you have an exclusionary policy, you will have to pay for damages to your car, injuries to you or your passengers, and any other losses yourself. Exclusionary policies are less common and are generally used for commercial policies.
How Much Auto Insurance Should You Have?
The amount of auto insurance you need depends on a variety of factors, including the type of car you drive, your driving history, the amount of assets you have, the value of your car, and your financial situation. For most car owners, the minimum amount of auto insurance is $30,000 for bodily injury per person and $60,000 for bodily injury per accident.
In addition, you should choose a minimum amount of property damage coverage that is equal to the value of your car.
There are many things to consider when choosing the right auto insurance policy. It’s important to get enough coverage so that you’re protected in the event of an accident or other covered situation, but it’s also important to make sure you’re not paying more than you have to.
You should shop around and compare policies to find an auto insurance policy that meets your needs and your budget. If you only have the minimum amount of insurance required by your state, you are leaving yourself open to financial loss in the event of an accident or other covered misfortune.