Getting behind the wheel can be quite exciting for new drivers, especially because of the independence that comes with it. However, before you do that you need to protect yourself. You can do this not just by learning all the safety rules but also by getting car insurance.
Car insurance is not just a piece of paper that you need for formality purposes. Mishaps don’t come announced. Hence, you should shop for your car insurance policy after much thought and consideration. Your car insurance policy is basically a combination of different types of coverage. The main goal is to find the best coverage at an optimum price and to do that you need to do your homework. Here are some of the components that you should include in your policy:
1. Bodily injury liability
In case you get into an accident and hurt other people, this component will take care of their medical bills. Not just that, bodily injury liability also covers any loss of income faced by the victim due to the accident. It will also help you pay any legal fees in case the victim decides to take you to court.
This policy is often described in numbers such as 20/50 or 100/300. It includes the maximum amount that the policy will pay for a single person and for everyone involved in the accident. To simply describe, 20/50 means that the insurer will pay $20,000 for one single person and $50,000 maximum for all the people that you hit in the accident. Remember, this component does not cover your medical expenses.
2. Property damage liability
The liability coverage has two components: bodily injury and property damage. Property damage is similar to bodily injury and comes in handy when you damage the property of someone else. Just like bodily injury, property damage does not cover your vehicle or property damage.
Both types of liability coverage are mandatory by most of the states. In fact, some states also define the minimum property liability coverage that you need to buy. For example, in California, you need to buy coverage of at least $5,000 while in Texas this figure is $25,000. Sometimes, property damage liability is mentioned along with bodily injury as a third number 20/50/10. This means that it will cover damages up to $10,000.
3. Collision coverage
While the above two components take care of the damage you cause to others, this component covers the losses that you face. In case someone else hits your vehicle, collision coverage will look after the expenses. The important thing to note here is that it only covers the damage caused by a collision and does not include theft or vandalism. Other than that, it will cover the damages if you hit an inanimate object or you drive into a pothole. However, collision coverage can only be bought along with the liability and comprehensive coverage. This component can be a bit pricy; however, you can manage the costs with the right amount of deductible.
4. Comprehensive coverage
While collision coverage takes care of the damages that are in control, the comprehensive covers the factors that are beyond control. This includes natural disasters or theft or vandalism. It is an optional component. However, if you are leasing a car, then you might have to purchase it. To buy this component you need to select a deductible, that is the amount that you will pay out of your pocket towards a claim. For example, if you choose a deductible of $1000 and the claim is $200, then you will pay $1000, and the insurer will pay $1000.
Comprehensive coverage comes with a limit, and that is the actual cash value of your vehicle. In case your car gets stolen, then the insurer will pay you the amount that is equal to the depreciated value of your car.
5. Uninsured Motorist
The uninsured motorist comes in handy when you get hit by someone who does not have insurance at all or whose company is not willing to pay. This component will pay for the medical expenses and funeral expenses (if any) for all the victims in your car. This will be also applicable in the cases of hit and run. Without this component, you will not be paid in case the other driver is at fault and is not insured.
Your coverage completely depends upon you. If you have an old car and you think that I would scrap my car later then you probably don’t need an extensive policy; you can just get the minimum one for legal requirements.
People often opt for the minimum coverage required by the state. However, in certain cases, this might not be enough. What if you are involved in an accident where your costs exceed your coverage? In such cases, your assets would be seized to pay for the repairs and other associated costs. We don’t mean to scare you, rather we want to make sure that you do not take this lightly. Especially, if you are a newbie at driving, then you need to more careful since your chances of getting into a mishap are higher.
If you have health insurance, then you don’t need components such as personal injury protection. However, make sure to get adequate coverage against uninsured motorists because it helps you cover the costs that your health insurance won’t.
Comprehensive and collision coverage is helpful in cases when you have to sell your car. This is because they have a deductible. You are paid based on the value of your car and not what you paid for it.
People are usually attached to their cars, and probably you are as well. A car is not just something that moves you around, it is a part of your identity. Hence, we understand that it is important for you to protect your car. This is why you need to understand the details of your policy.
About Michelle Joe: Michelle Joe is a blogger by choice. She loves to discover the world around her. She likes to share her discoveries, experiences, and express herself through her blogs. You can find her on twitter: @michellejoe524