You would like to know what to expect from your auto policy because with this particular coverage, many lives have been saved because auto insurance ensures that injured people were quickly and adequately treated when they were involved in an auto accident, which has made auto insurance so important to have.
What is Auto Insurance?
Auto insurance covers every type of vehicle including cars, motorcycles, and trucks among others. It is used primarily for financial protection against damage to your car or bodily injury when you are involved in an accident as well as the liabilities you can get from such events.
There are several types of policies as well as auto insurance companies.
The major coverage of policies is regulated by each individual state, although the actual terms of the auto insurance policy do vary from one state to another.
Here are the types of auto insurance coverage and some tips to consider when choosing an insurance policy company would also be discussed.
Comprehensive and Collision Insurance Coverage
This insurance protects your vehicle when you are responsible for the accident or if the at-fault party's insurance refused to pay your claim.
The insurance company decides what to pay you, which is usually the amount your car is worth unless you have added a rider to pay replacement cost of your vehicle.
As an example, your 3-year-old car may have a current value of $10,000, which the cost to buy a new one is $15,000. If your repairs will cost $9,000 or more, it would be more cost-effective to not repair your car but rather to settle on a total loss basis.
If you don't carry replacement value on your policy, your auto insurance would pay $10,000 whereas with replacement value cost, their payment to you would be $15,000.
Deductible are also considered here when you purchase auto insurance, with most people electing to carry a higher deductible on collision coverage and a lower deductible under comprehensive coverage.
Liability or Third Party Coverage
Liability or third party insurance is usually a required coverage to carry in most states; everyone is expected to have this basic auto insurance coverage.
When you in an accident, an investigation is done to determine who is responsible for the accident.
Once the inquiry is completed, the party who is at fault would be known and if you are at fault, your insurance company will pay damages to the person you collided with.
You determine the amount of coverage you will carry when you initially purchase auto insurance and the insurance company will only pay up to that amount if you are at fault in an accident.