Auto insurance can help you pay for medical bills, vehicle repairs, and other expenses you may incur if you are in an accident or if you cannot drive your car due to a covered incident. You can choose to include different types of coverage in your policy. The type of auto insurance you need to purchase depends on the level of protection you want.
Why do i need auto insurance?
At a minimum, most states require drivers to maintain liability coverage to help pay for medical bills and property damage if they cause an accident. Some states also require other types of coverage. And if you have a car loan or a lease, your lender will usually require specific types of insurance coverage.
A single car accident can result in thousands of dollars in medical bills and property damage. Having adequate auto insurance coverage can help protect you against financial loss after an accident or other covered damage.
What does auto insurance cover?
It depends on the type of blanket you are wearing. Nonetheless, insurance can help pay for medical bills, vehicle repairs, property damage, lost wages, etc. If you need help paying for expenses you might incur after an accident, such as towing or the cost of renting a car, you need coverage for those specific expenses.
What if I don’t have auto insurance?
In almost every state in the country, you must purchase auto insurance to avoid breaking the law. If you get caught without it, you could be fined. Depending on where you live, the state may suspend your license and / or registration or impound your vehicle. And you will have to pay to get them back.
If you are involved in an accident while driving without insurance, you may have to pay the expenses related to the accident out of pocket. If you try to purchase a policy without being insured, your rates will likely be higher than those of someone who has maintained continuous coverage.
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What is the minimum auto insurance I need?
It depends on where you live. Almost all states require liability insurance, but minimum coverage amounts vary from state to state. Some states also require drivers to purchase coverage for uninsured / underinsured motorists and personal injury protection (PIP) or medical payments coverage (MedPay). The minimum limits for these coverages vary depending on the state in which you reside.
If you have a car loan or lease, your lender will likely require you to have collision insurance and full coverage as a condition of your financing.
What Are the Different Types of Auto Insurance Coverage?
There are many types of auto insurance coverage you can choose from, and each protects you against something different. When purchasing auto insurance, you need to select which ones you want to include. Here are some of the more common types that you can have. Some are compulsory, others optional.
Liability coverage comes in two types: bodily injury and property damage. Both protect you in the event of an accident. Personal Injury Liability helps pay for accident-related medical costs for the driver and passengers of the vehicle you hit. Liability for property damage helps pay for repairs to the other person’s vehicle. It can also help you pay your legal fees if someone sues you for an accident. However, it will not cover your injuries or damage to your vehicle.
Every state except New Hampshire and Virginia requires drivers to be covered by liability insurance.
Collision coverage is generally required if you have a car loan or lease. If not, it is optional. It pays to repair damage to your vehicle caused by an accident, whether with another car or a stationary object like a telephone pole.
If you have collision coverage and your car is totaled, the insurance company will pay up to the current market value of your vehicle, less your deductible. The value of your car can help you determine whether maintaining this type of coverage is worth it. If your car isn’t worth much, it might be better to ditch it.
Comprehensive coverage covers certain types of damage not caused by an accident including extreme weather conditions, falling objects, vandalism, theft, rodent damage, and more. If a covered event damages your car, the insurance company will reimburse you up to the actual cash value of your car, less your deductible.
Lenders and leasing companies usually require full coverage if you have an auto loan or lease. But no state currently requires drivers to maintain this type of coverage.
4. Uninsured and underinsured motorist
Just because a state says drivers must have auto insurance doesn’t mean they will. Uninsured / Underinsured Motorist Coverage protects you if a driver with no insurance or insufficient coverage hits you.
5. Personal Injury Protection (PIP)
Liability insurance helps pay for other people’s injuries. But, Injury Protection (PIP) can help pay for your injuries and those of your passengers after an accident. PIP is available in no-fault states, which means insurers pay for injuries to their policyholders, regardless of who is responsible for the accident.
6. Medical payments (MedPay)
Medical expense coverage can also help pay for medical expenses related to injuries sustained by you and your passengers in an accident. However, it is only available in states that do not have “no-fault” insurance laws.
7. Refund of the rental car
If your car can’t be driven after an accident, you still need a way to get around. But paying for a rental car can get expensive. If you have rental car reimbursement coverage, the insurance company will pay for you to rent a car up to a certain dollar amount per day.
8. GAP insurance
As soon as you leave the parking lot, your car is worth less than when you bought it. And it continues to depreciate over time. If your car is in a covered loss, GAP insurance or guaranteed asset protection helps cover the difference between your loan balance and your car’s actual cash value.
9. Other add-ons
You can include many other additions to your auto insurance policy, such as window coverage, roadside assistance, custom equipment coverage, new car replacement, and more. Add-ons help provide additional protection in specific situations.
What is full coverage auto insurance?
You may have heard the term “full coverage” insurance. But technically there is no such thing as no cover or combination of covers can protect you 100% of the time.
When people use the term “full coverage” it usually means a combination of liability coverage and property damage coverage (ie, full coverage and collision).
What is the SR-22?
People sometimes mistakenly think that a Form SR-22 or FR-44 (in Virginia and Florida) is insurance, but it is not. This is proof that you have at least the minimum amount of insurance required by law in your state.
It is often required by the state or the court system after a serious driving offense, such as a DUI or DWI.
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How to buy auto insurance
Buying auto insurance is easy. You can get a quote and buy coverage in a few simple steps.
- Contact the insurance company or your agent.
2. Complete an application. You must provide basic information, including:
- Date of Birth
- Social Security number
- Driver’s license number
- Names of insured drivers you want to include in the policy
- Make, model and VIN of the car
- Policy limits and deductible amount
3. Get quotes from multiple carriers.
4. Review your policy options and select the coverage that’s right for you.
Buy auto insurance online
It’s a good idea to get quotes from multiple carriers, as costs can vary from insurer to insurer.
You can do this online through individual insurance companies. Or you can use an insurance comparison website and get quotes from multiple providers at once. Once you’ve chosen a policy that matches your needs, there are many companies that allow you to complete your purchase online.
Reduce your rate with discounts
Insurance can be expensive, especially if you buy more than your state’s minimum requirements. Fortunately, there are ways to lower your costs.
Most insurance companies offer discounts to help lower your premium. The most common include multi-car, multi-policy, safe driver, and low mileage discounts. But the discounts vary from one insurer to another. So be sure to shop around and ask which ones are available.
How Much Car Insurance Should I Buy?
A general rule of thumb is to have sufficient coverage to protect your assets if you are at fault for an accident causing serious injury or death. And if you think the state’s minimum requirements will provide this kind of coverage, think again. They tend to be low. If you only purchase the minimum amount of insurance required, you may be liable for expenses in excess of the policy limit.
For example, in Maryland, the minimum limit of liability for bodily injury per person is $ 30,000, the minimum limit for personal injury per accident is $ 60,000, and the minimum limit of liability for property damage is $ 15,000. The insurance company will probably write your limits like this: 30/60/15.
But these limits are not high enough to cover a serious accident. The average cost of a three-day hospitalization is $ 30,000, according to health care.gov. And that doesn’t include follow-ups, physical therapy, or any other medical care you might need after you leave the hospital.
Raising your limits above the minimum will provide more protection. Insurers often recommend setting limits at 100/300/100. If you can afford the premium of a policy with higher limits, like 250/500/100, even better.
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