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Understanding Car Insurance

Having car insurance is compulsory by the law – this is the first reason why you should have car insurance deal. The other reason being that it can help in a lot of ways financially in case your car is part of an accident. Depending on the kind of coverage that you have selected, the things that could be covered are –

  • The benefit to survivor, in case there is a death as a result of the accident.
  • Covers the legal fees in case there is a lawful suit due to the crash.
  • Because of the collision, pays for the repairs for the damages on the car or vehicle.

Hence having car insurance is not just beneficial as far as the legal standpoint is concerned, it is also essential when it comes to the money part of the deal. Additionally, what makes the car insurance beneficial is the coverage that you select. Also along with choosing the right coverage, you need to ensure that you get the best car insurance deals. Getting the best car insurance deals can be acquired by the process of comparing the insurance deals provided by the different insurance providers and then selecting the one with the best value and coverage as per your requirement.

Depending on the coverage of your car insurance policy, there can be a comprehensive cover, which would cover all possible problems that could arise in case of an accident. It’s not just the accident that’s worrisome, the factor to worry about comes in, if you are held responsible for the crash. In the case when the blame of the accident falls on you, it’s not only your car repairs that you need to worry about, there are the people who are involved in the crash that also you would need to take care and worry about.

Types of Car Insurance Coverage

Mainly there are four parts to the insurance cover, however, please note that not all of them are mandatory. The existence or non-existence of these parts depends on the kind of coverage that you choose. However, let’s discuss and see what these parts cover –

  1. Liability for personal property and physical injury

In case if the accident is due to your negligence, then you would be required to cover the damages for the other person’s that were involved in the crash. It could damage in the form of covering injury expenses for the persons involved in the accident. And if there is a death, then covering the damages to the survivors. In this part of the insurance policy, all of this is taken care by the insurance provider. As the car and the policy owner, you then don’t have to hassle overtaking the expenses on your head. Further any loss of wages or any sort of pain or suffering that the person is going through.

Most of the times, the expenses are so huge that there have been instances when the person blamed for the accident has to part ways with his assets, just so that they can cover all the expenses related to the crash. The best car insurance deals ensures that you don’t have to worry about the costs and parting with your assets to cover the costs of the accident.

The liability coverage for this type of insurance is mostly represented using a series of 3 numbers, i.e., 100/300/50. To understand these numbers, let’s take a quick numeric example. So the first number indicates the coverage that would be paid to one person for the injuries and if there is more than one person involved, then the second number indicates the maximum amount that would be paid out. So if $100,000 for one person then $300,000 is the maximum amount that would be paid out. And finally, last but not least, the final number indicates the amount that would be paid out for covering the damage on property, which in this case would be $50,000.

This type of liability coverage is highly recommended when it comes to car insurance policy.

  1. Protection against Personal Injury

This type of coverage mainly takes care of your medical expenses and any loss of wages that you might incur due to the accident. Along with your medical expenses, this type of policy also covers the medical expenses and loss of wages for the people traveling with you at the time of the accident. If you have the related disability and medical policies, then this type of plan might not be required.

  1. Comprehensive and Collision

This type of plan mainly covers any damage that might have occurred to the car due to the accident or in the case where the vehicle would have rammed into a utility pole.

Comprehensive type of policy would also cover your entire care, in the case for some reason the car gets stolen or damaged due to any natural disaster.

The choice for this type of coverage for your car insurance policy is entirely up to you. If you feel that your car is not very expensive or if you think that you can afford to incur the costs in case of any damages, then you can choose not to get this type of policy cover. Not availing this kind of coverage can help save money.

  1. A motorist who is uninsured

This type of policy cover would help when you are involved in an accident where the accident is caused because of the fault of the other motorist. However, the other driver doesn’t have insurance cover, or the cover is not enough to cover your damages also.

This is mainly helpful in case of hit-and-run accidents.

Gap Insurance

All these types of insurance ensure that in case of an accident you are adequately protected. However, what happens in case if you total your car entirely. If there happen to be some circumstances such that the costs involved in repairing the car damages cross the market value of the vehicle.  In this case, the car or the car is considered to be a “Total Loss.” There are also some instances where the amount you receive from the insurance company in exchange of the damages or even the market value of the totaled car will not cover or pay off the amount that is still owed for the auto loan, in this case, what comes into handy is – Gap Insurance.

Basically, gap insurance is an entirely optional car insurance coverage. It is an add-on coverage that can be availed for your car. This type of insurance coverage can help the drivers or the car owners in some situations, to cover the “gap” between what is currently owed on the car and what is the car’s actual cash value, in case of an accident. It’s important to note here that when we are referring to the car’s actual cash value, we mean the monetary value of the car when the accident occurred and not the original value of the car. Gap insurance covers the following –

  • At times, gap insurance may cover the theft in case the car is stolen and cannot be salvaged.
  • The deductible would still be applicable, even in the case of gap insurance. Hence if the amount of reimbursement is $4,000 and the deductible is $500, then the total reimbursement amount, which you would receive, is $3,500.
  • Gap insurance is not meant to cover only engine failure. Gap insurance is meant to cover the situation when there is a total loss from an accident that is covered by insurance.
  • This insurance type is meant to cover only vehicle losses and is not meant to cover any physical injuries or medical expenses or even funeral costs, in case of an accident.
  • Gap insurance is also referred to as “Negative equity,” which stands for the difference or the gap between the car’s actual value at the time of the accident and the amount that you owe to the bank on your auto loan.

Takeaways

When it comes to availing the best car insurance deals, it goes beyond just the legal requirement of having the same. Taking the best car insurance deals with the relevant coverage can help take care of the well-being of a person blamed of the accident by lessening the risks of paying the massive amounts and the expenses involved when it comes to a major car accident. Car insurance helps in case if you are involved in a crash which either occurred due to you or due to a person, who doesn’t have enough coverage to cover your expenses too. In such cases, car insurance helps by paying the medical fees and paying for repairing the damages to the car.

Additionally, car insurance also covers the cost of medical expenses of the passengers that were in the car at the moment when the accident occurred. All of these expenses can lead to significant costs and having the insurance policy take care of these expenses can prove to be a blessing in disguise. It’s further significant to mention here that at certain times there are certain expenses that are not covered by your regular medical insurance, again in this case car insurance helps, provided a covered accident causes the injuries.

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What is the best and most affordable car insurance?

The cheapest auto insurance always depends on two things, you and the car you want to insure. Insurance rates are determined by risk, and if you keep your car and you at low-risk, your rates will be lower. When searching for the best deal keep in mind that comparing rates, is only the beginning of the process. Talk to agents about discounts for better deals, and use preventative measures to keep your costs at minimum.

Compare Insurance Companies

The easiest way to find the cheapest auto insurance, is by starting with a comparison. This is usually done on the Internet. Many companies and/or websites will allow you to put in your information, and get instant quotes from several companies. Choose the insurance package, that is the minimum required for your state, and go from there adding the options you desire.

An Agent May Have the Cheapest Auto Insurance

Many times after ordering insurance on the Internet, a letter is issued with a corrected amount. This can be because the state was wrong in the system, the driving records weren’t checked, or all of the car information wasn’t correct. An agent is usually more reliable, when the actual purchase of auto insurance is made. They will also be up front about discounts, when you ask.

Discounts

Always ask an agent for a list of available discounts. Even if you don’t qualify for them, you should still ask for a list. You may be able to take a quick class, or install a cheap alarm system in your car, to get the cheapest auto insurance. If you haven’t purchased a vehicle yet, and are still shopping around, ask an agent what the cheapest vehicles are to insure, and start your search for a new car.

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Sam Patten

I have experience in print publishing, I worked as an Advertising Manager at a magazine in London, UK. I'm English born and raised, now based in Australia. I've got experience writing both commercial and non-commercial content. I'm a native English speaker.

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