Learn More About the Basics of Car Insurance Coverage

Whether it’s an accident, a collision, or an environmental disaster, car insurance can cover these unfortunate events. Insurance coverage can vary from state to state and may be required by law to have.

Sometimes, it can be hard to understand what car insurance is and why it is a good idea to have insurance on all your vehicles. This article will explain the basics of car insurance coverage and the different types of coverage options that may be available in your state.

What is Car Insurance and Why Do I Need It?

Car insurance is a form of protection that you and your family could benefit from in the event that something unfortunate happens to your vehicle. When you are involved in an accident, collision, or another event, insurance may be able to help you financially with costs related to bodily injury and/or property damage. Car insurance is a contract between the policyholder and the insurance provider.

Under this legally binding contract, the policyholder agrees to pay a monthly payment or yearly premium for your policy. Upon filing a claim or signing an agreement, the insurance provider agrees to pay for losses and expenses related to covered accidents.

What is an Insurance Claim?

An insurance claim is a formal request that a policyholder files to their insurance carrier for compensation for all covered losses. You can file an insurance claim if you have car insurance and you get into an accident or another significant event. Your needs and situation as a driver determine the right coverage for you. Depending on the type of policy you purchase, your insurance would cover vehicle damage, medical expenses, and property damage for yourself or others.

An insurance claim allows the other party to receive compensation for covered losses. Insurance providers review claims constantly in order to determine their validity. Once approved, the provider will issue a payment or another form of compensation to the policyholder. Here are the steps you need to take when making a car insurance claim:

1. Document the Incident: Provide Evidence From the Accident Scene
2. Obtain Contact and Insurance Information From the Other Driver
3. Call Authorities for Them to Create A Police Report
4. Take Pictures of the Scene and any Damage, if Possible
5. If There Were Witnesses, Collect Their Contact Information
6. Call Your Insurance Company and Notify Them of the Accident.
7. Speak to a Customer Service Representative and Go Through the Claim Process Until the Claim is Settled.

What Does Insurance Cover?

It does not matter if it was your fault or not. An accident is an accident. It is essential to have adequate protection that will cover you in the event of an accident in order to avoid having to pay the big bill.

Depending on the coverage the policyholder accepts, it could cover all or some of the expenses but sometimes has a deductible. The deductible is the amount of money you pay out of pocket towards a covered claim. It is a key feature of many types of insurance coverage. A higher deductible could lower your monthly payment because you will be paying more out-of-pocket when you file a claim. Lower deductibles cost more in premiums but cover more expenses after an accident. When choosing your vehicle’s deductible coverage, be careful- it will affect the amount you will have to pay in the event that you are in an accident! Choose the option that makes the most sense for you and your budget. In the event that your vehicle is deemed “totalled” or is not financially feasible to repair, insurance will pay out a fair value of the vehicle.

If you owe any money on the vehicle, such as a loan taken out to finance the purchase of the vehicle or any title loan, then that money will go towards paying off the remainder of the loan. The remaining balance, if any, will go to you. However, some people in this situation find themselves in an unfortunate situation when this happens, finding they owe more on the vehicle than the insurance company is willing to pay out for it. There is a special type of insurance for this situation called gap insurance which will cover any remaining balance owed.

Types Of Insurance Coverage

The type of insurance you agree to pursue will determine your monthly cost and or how much you will pay per contract. Some examples of coverages for auto insurance are:

• Liability Insurance
• Comprehensive and Collision Insurance
• Personal Injury Protection
• Medical Coverage for the Policyholder and/or Others
• Uninsured or Underinsured Motorist Insurance

What’s the Total Cost of Auto Insurance?

Depending on your needs as a driver, the miles you drive, and sometimes your age, the actual cost of car insurance can vary. Insurance providers use several different factors, such as where you live, your zip code, age, gender, driving history, and coverage level to determine premiums for each policyholder. Insurance premiums can seem expensive, but the coverage you could get far exceeds what you pay in most cases.

With this information in mind, you can understand the basics of car insurance coverage and make an informed decision before you choose a new policyholder!