Car insurance provides protection in the event of a car accident, with many states mandating its purchase as part of their requirements for loans or lease agreements.
Your premium price depends on various factors, including age and gender; driving history (speeding tickets); car type; and coverage types available to you. We’ll examine some fundamentals of policies so you can get an understanding of their scope.
Liability coverage is one of the most widely-utilized types of car insurance, providing coverage for medical bills and repair costs when you cause an accident as well as legal expenses if anyone decides to sue you. Most policies come equipped with liability protection as part of the standard package deal bundled together with collision and comprehensive policies.
Limits for liability coverage typically take the form of three numbers, with the first representing bodily injury coverage and the second representing property damage coverage. You can typically purchase up to $250,000 worth of bodily injury liability per person and $100,000 of property damage coverage per accident.
What happens if the at-fault party doesn’t have car insurance? An attorney can help with that.
Collision coverage reimburses you for damage to your vehicle caused by collision with another car or object such as a fence, guardrail or tree. Comprehensive coverage helps cover other incidents including fire, theft, floods, vandalism hail and falling rocks or trees that do not involve collision.
Third-party coverage, commonly referred to as liability coverage, helps cover injuries or property damage you cause to other people with your vehicle. Third-party cover is often mandated by law in most provinces and territories; minimum amounts vary by jurisdiction.
Bodily Injury Liability Insurance (BIL) covers expenses such as medical bills, legal fees, lost wages and funeral costs associated with accidents you cause. Property Damage Coverage (PDL) pays to repair other cars and property damaged by your vehicle – such as trees, fences, mailboxes and garages.
Liability cover is an essential investment, since accidents can arise at any moment and result in expensive lawsuits. It should be part of every driver’s financial plan regardless of ownership or leasing arrangement; though liability policies don’t always cover repair costs when an accident does happen so comprehensive coverage may also be beneficial.
Comprehensive car insurance may be more costly, but it provides invaluable protection from unpredicted events like hurricanes, hail storms and tornadoes as well as vandalism theft or break-ins. Experts generally suggest keeping this coverage if both premiums and deductibles fall below 10% of your vehicle’s cash value.
Comprehensive policies are frequently required by lenders or lease companies when you purchase a new car, though you should assess if additional coverage is worth paying for, especially if your car is relatively old and low resale value. Prices of comprehensive policies depend on factors like your location, driving record and credit history as well as selecting an affordable deductible at signup which will lower costs while mitigating risk; it’s also wise to select a deductible you can comfortably meet in case of a claim being submitted against it.
Uninsured/underinsured motorist cover
Uninsured motorist coverage protects you in the event of an accident with a driver who doesn’t carry car insurance, or one whose policy doesn’t offer enough limits to cover your costs. It is typically combined with bodily injury protection and medical payments coverages for maximum effectiveness.
As part of the application process for car insurance, insurers analyze your risk and charge an appropriate premium. They consider factors like your driving history, where you reside and the safety ratings of your vehicle – as well as your credit score which could play an integral role in how much coverage costs.
Drivers under 25 tend to pay higher insurance rates than older drivers as insurers view them as more of a risk. But by taking a safe driving course or installing anti-theft devices, their risk can be decreased; premiums will also depend on your car’s value and whether or not comprehensive or collision coverage is selected.