Car insurance is mandatory in most countries and most car dealers will not let you drive a new car away from their premises unless you can provide policy documents to prove that you have insurance for your new car.
The policy will have numerous facets to it. Two of the most important criteria when assessing premiums for a car are: the type of insurance needed on the car and what type of car needs to be insured.
Understanding the different types of insurance coverage is a first step to understanding your policy documents. If you have not yet bought a policy, understanding what is required might help make the decision easier for you.
Liability insurance is one of the most common types of vehicle insurance coverages. This insurance is a must-have and covers bodily injury as well as property damage to a third party. This will cover medial expenses, loss of wages, pain, and suffering. Property cover includes compensation for automobiles and property including lampposts, structures and more. Where necessary this also covers legal defense and court fees. Many jurisdictions require certain liability insurance minimums. Collision cover pays for damages to your own car.
Comprehensive coverage compensates for losses and damages to the insured car that are not caused only by an accident. Damages paid by comprehensive cover include theft, vandalism, floods, hail, wind and fire.
Should an uninsured motorist crash into your car and you have uninsured cover then your insurance company will pay for the damage. This would apply as well in the case of underinsured cases. The other driver many not have insurance or he may have too little insurance.
Two other kinds of cover that you can get are (PIP) personal injury protection and medical expenses cover. PIP pays out whether you were to blame for the accident or whether you were not to blame.
Almost every policy today comes with an option that covers you if you have to rent a car whilst yours is being repaired. If the car is written off, you may also be able to rent one until you are paid out for a new car.
The smarter insurance companies have combined most if not all of the above options into one policy. If you travel long distances then you might want to top your cover up this will relieve the burden of having to access lump sums of cash to make up for any shortfall at claim time.
In order to decide how much insurance you need, you have to assess what you are willing to pay out of your pocket for expenses arising from an accident versus what you want the insurance to pay. You then need to assess your needs accordingly. Once you have the answer to this question, you are ready to buy your car insurance.
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