What is insurance for a car? What does car insurance pay for?
In case of an accident, auto insurance will cover you and your passengers. But it's up to you to choose how much coverage you want.
Will the company pay for the damage to your property? Will insurance cover everyone on the plane, or just your family? What would happen if your daughter drove your car?
When it comes to auto insurance, what questions should you ask your insurance company? This article will help you decide which insurance policy is best for you.
What kinds of car insurance are there?
Liability insurance, or insurance for other people.
In general, this is the least expensive type of insurance that an auto insurance company will offer. This is the most basic insurance. If you get into an accident and it turns out to be your fault, the other person's damages will be paid for by your auto insurance company.
Most auto insurance companies decide ahead of time what they will cover. This is the most the insurance company will pay out if there is an accident.
For example, the agent might agree to cover $10,000 per person for bodily injury, $40,000 per person for bodily injury, and/or $10,000 per accident for property damage.
You should check with your car insurance company to find out what they will cover and how much.
Some auto insurance companies might offer you a very low premium, only for you to find out that your coverage is very limited and not worth it.
"Collision and comprehensive coverage," "comprehensive insurance," and "full comprehensive insurance" are all terms for the same thing.
A car insurance company will also offer you a type of insurance called "comprehensive." As the name suggests, this insurance will cover you in every way.
In simple terms, this means that if you cause an accident, your insurance company will pay to fix the car.
But it's not that easy. The auto insurance company almost always has the last word on how much will be paid out, so if it's cheaper for them to give you the car's market value, they will.
You might think your car is worth $1,000, but it might only be worth $500 on the market. This doesn't happen very often. So, if your car needs repairs that cost more than $500, your auto insurance company will just pay you the car's book value.
You should make sure that the insurance company doesn't decide how much the car is worth on the market. Usually, groups like the AA can give you an unbiased market value.
As with third-party insurance, the auto insurance company will almost certainly limit the amount that will be paid out, but in general, a comprehensive insurance will have higher limits.
Vehicle for Recreation
Recreation vehicle insurance is not the same as auto insurance.
You shouldn't think that your RV is fully covered by insurance just because your car is.
"Other kinds of car insurance"
Medical (MedPay), Personal Injury Protection (PIP), and No-Fault Coverage (No-Fault Coverage)
If you get into an accident, this insurance will pay for your medical bills and those of your passengers.
The no fault cover means that the auto insurance company will pay no matter who was at fault. This gives you peace of mind that, at the very least, your family and friends are covered.
In some countries or states, PIP is often a minimum requirement. Ask your auto insurance company what the rules are.
Coverage for uninsured or underinsured drivers
This insurance will cover you if the person who caused the accident doesn't have enough insurance or doesn't have any insurance at all. In some states, it is also a minimum requirement.
You should ask your car insurance company how much you will be charged if this happens. Most of the time, your car insurance company shouldn't charge you extra fees.
Reimbursement of rental fees, towing, and labour.
Auto insurance companies often use the "extras" that come with comprehensive insurance as deals.
So if your car gets damaged, the insurance company will pay for a rental car (sometimes only for a few days).
Your car insurance company may also offer to pay to have your car towed (not always included).
You should always ask your auto insurance company what the coverage includes.
The legal requirements.
Most states and countries require a certain level of car insurance, from full coverage to third-party liability.
Most of the time, it's up to you, the driver, to make sure that your auto insurance company gives you the bare minimum. Most of the time, the insurance company (the auto insurance company) is not required to tell you what you need to do.
But of course, a good car insurance company will (should?) do everything it can to help you get the best deal.
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