Taking out an auto insurance policy is crucial if you're planning to drive a vehicle on a regular basis. However, with so many options available to you, it can sometimes be difficult to know what you need in order to be fully covered.
The worst thing that could happen is being involved in an accident and being under or uninsured. This can lead to multiple lawsuits, possible suspension of your license and a bad driving record. Knowing the different components of a typical insurance policy can help in determining the right choice for you.
Most insurance policies have a deductible, which simply involves the amount you're responsible to pay before coverage kicks in. Let's say that your deductible is roughly $2,000 a year. This means that your coverage will not kick in until you've reached this particular limit.
You are responsible for paying the deductible regardless of the amount that needs to be paid out. In order to lower the deductible, you'll need to increase your premium rate, which makes up for the money owed.
Liability coverage is mandatory in most areas, regardless of whether or not you have a current loan on your vehicle. In general, this covers both bodily and property damage that is done in the event of a crash.
Depending on how much you pay for coverage, the amount that is covered will vary. In general, the more you pay for your insurance premium, the more benefits you'll have and the more that will be covered if an accident occurs.
Comprehensive is a coverage option that isn't necessarily needed unless you have a loan on the vehicle. However, you might want to consider adding this to your policy in an attempt to protect yourself from future headaches.
Comprehensive typically covers incidents like fire, theft, hail damage and even vandalism. Without this coverage, you are left paying for the repairs to your car on your own and if the vehicle is stolen, you won't receive any compensation as a result.
Collision is exactly as it sounds, since it'll provide you with coverage in the event that you hit another vehicle, building, fence or do damage to the car itself in any other way.
You will be responsible for paying the deductible, but your insurance provider will pay for all other damages that have been sustained. While collision isn't always necessary, your lender may require it if you have a current loan on the car.
The beauty about taking out third party liability insurance is that there are a number of additional features that you can benefit from when opening a policy. For instance, you can include roadside assistance, which helps to pay for tow truck services in the event that you get stuck on the side of the road.
You can even add rental reimbursement if you need to rent a car while your vehicle is in the mechanic shop. These features will increase the amount of your premium, but can come in handy if you ever have to use them.