Type of Car Insurance

Car insurance is mandatory in most countries for every car owner. It is also vital to protect yourself and your vehicle from any mishap. However, with so many insurance options available, it can be challenging to select the best one for your needs. In this article, we will look at the various types of car insurance policies available to help you make an informed decision.

Liability Insurance

Liability insurance is the most basic type of car insurance required by law in almost every country. It covers the expenses of the other party involved in an accident that you caused. This policy may include property damage and bodily injury. The liability insurance policy does not cover the damages caused to your own vehicle.

Liability insurance has two components: bodily injury liability and property damage liability. Bodily injury liability covers medical expenses, lost wages, and pain and suffering of the injured person. Property damage liability covers damage caused to the other party’s vehicle or any other property.

It is crucial to note that liability insurance has a coverage limit. If the costs exceed this limit, you will have to pay the difference out of your pocket. Hence, it is advisable to purchase liability insurance with higher coverage limits if possible.

FAQ

Question
Answer
What is the minimum liability insurance coverage required by law?
The minimum liability coverage limit varies by country. However, it is usually mentioned as a set of three numbers, such as 25/50/25. The first number represents the bodily injury limit per person; the second represents the bodily injury limit per accident, and the third represents the property damage limit.
What happens if the damages exceed the liability insurance coverage limit?
If the damages incurred exceed the coverage limit, you are responsible for paying the remaining amount out of your pocket.
Can I purchase additional liability insurance?
Yes, you can purchase additional liability insurance to increase your coverage limits.

Collision Insurance

Collision insurance covers the damages caused to your vehicle in an accident. It usually does not include damages caused by natural calamities or theft. If you are at fault in an accident, collision insurance will pay for the damages to your vehicle. However, if the other party causes the accident, their liability insurance will cover the damages.

Collision insurance has a deductible, which is the amount you pay out of your pocket before the insurance policy covers the damages. The amount of the deductible depends on the policy you purchase.

Collision insurance is beneficial for those who have a new or expensive car, as the repair costs can be high in case of an accident. However, if your car is old or has low value, you may consider skipping this policy.

FAQ

Question
Answer
What is a deductible?
A deductible is the amount you pay out of your pocket before the insurance policy covers the damages.
Can I choose the deductible amount?
Yes, you can choose the deductible amount depending on your policy.
Does collision insurance cover damages caused by natural calamities?
No, collision insurance usually does not cover damages caused by natural calamities.

Comprehensive Insurance

Comprehensive insurance covers damages caused by natural calamities, theft, fire, and vandalism. It also provides coverage for damages caused by a collision with an animal. This policy usually has a deductible that you must pay before the insurance policy covers the damages.

Comprehensive insurance can be expensive, depending on your vehicle’s make and model. If you have a new or expensive car, it is advisable to purchase comprehensive insurance. However, if you have an old or low-value car, you may consider skipping this policy.

FAQ

Question
Answer
Does comprehensive insurance cover damages caused by natural calamities?
Yes, comprehensive insurance covers damages caused by natural calamities.
Does comprehensive insurance cover damages caused by theft?
Yes, comprehensive insurance covers damages caused by theft.
What is the deductible for comprehensive insurance?
The deductible for comprehensive insurance depends on the policy you purchase.

Uninsured/Underinsured Motorist Coverage

Uninsured/Underinsured motorist coverage provides coverage when the other party involved in an accident is uninsured or underinsured. This policy includes bodily injury and property damage coverage. This coverage also comes in handy if you are involved in a hit-and-run accident.

This policy has a coverage limit that varies depending on the policy you purchase. It is essential to note that this policy does not cover damages to your vehicle in case of an accident.

FAQ

Question
Answer
What is uninsured/underinsured motorist coverage?
Uninsured/Underinsured motorist coverage provides coverage when the other party involved in an accident is uninsured or underinsured.
What does uninsured/underinsured motorist coverage cover?
Uninsured/Underinsured motorist coverage covers bodily injury and property damage.
Does uninsured/underinsured motorist coverage cover damages to my vehicle?
No, uninsured/underinsured motorist coverage does not cover damages to your vehicle in case of an accident.

Conclusion

Choosing the right car insurance policy can be daunting, but it is essential to protect your vehicle and yourself from any financial loss. It is advisable to compare the policies offered by different insurance providers before making a decision. Consider your budget, the make and model of your car, and your driving habits before purchasing car insurance. Remember, paying a little more for comprehensive coverage can save you thousands of dollars in the case of an accident.