Key Takeaways
- A car insurance policy consists of several types of coverage, some of which will be mandatory or optional, depending on where you live.
- Virtually every state requires drivers to have some form of car insurance and also sets minimum amounts.
- The price of auto insurance will vary according to the types and amounts of coverage, the deductibles you choose, and other factors.
What Does Car Insurance Cover ?
A car insurance policy consists of several types of coverage, some of which are mandatary in most states, while others are optional. The most common coverages are :
Reading: How Does Car Insurance Work?
- Bodily injury liability coverage. If you’re involved in an accident that results in an injury to another driver or their passengers and you’re at fault, this coverage will help pay any associated costs up to the limits on your policy. It is required in 49 states and the District of Columbia. (The exception is New Hampshire, which allows drivers to forgo insurance but “strongly recommends” that they buy it. However, there are circumstances that proof of insurance is required.)
- Property damage liability coverage. This covers any damage you cause to another driver’s vehicle or other property, such as a neighbor’s fence. It is also required in virtually every state.
- Collision coverage. Collision insurance can cover damage to your vehicle in the event of an accident. It is optional in every state.
- Comprehensive coverage. Also known as “other than collision,” comprehensive covers damage to your vehicle from causes such as flooding, a fallen tree, or a fire. It also covers you if your car is stolen. Like collision coverage, it is optional.
- Medical payments (MedPay)/personal injury protection (PIP). Mandatory in some states, MedPay or PIP covers medical bills and related costs if you or a passenger in your car are injured in an accident.
- Uninsured or underinsured motorist coverage. If you’re ever in an accident with someone who doesn’t have car insurance or whose insurance isn’t sufficient to cover the damage they have caused, this insurance can cover that shortfall. It is mandatory in some states.
If you ‘re leasing a car or have an great car loanword, you might besides consider a separate type of policy known as gap policy. In the event that your cable car is declared a full personnel casualty after an accident, gap policy will cover any difference between what your car insurance ship’s company pays you and what you still owe on your rent or loanword .
In addition to the coverages above, many insurers besides offer more specialize types of policies, such as old-timer or classic car insurance and ride-share indemnity for people who drive for companies like Uber or Lyft .
note that if you use your cable car for oeuvre purposes, you may need a commercial car policy policy preferably than a personal one .
Who Does Car Insurance Cover ?
In general, a personal car insurance policy will cover the policyholder and any kin members listed as drivers on the policy. Policies besides typically overlay anyone who is n’t on your policy but is driving your car with your consent .
How much Does Car Insurance Cost ?
According to AAA, annual premiums for full-coverage indemnity ( liability plus collision and comprehensive ) averaged $ 1,296 to $ 1,403, depending on the size of the vehicle, in 2021. still, your costs could be much higher or lower.
The cost of car policy depends on a wide-eyed range of factors, including the buyer ‘s drive record, where they live, and the value of their car. Prices can besides differ from company to caller for the same coverage .
A major variable is the policy ‘s levels of coverage. States that mandate certain types of coverage besides set minimum needed amounts for them. For exercise, a driver in Ohio must have at least $ 25,000 per person and $ 50,000 per accident in bodily injury indebtedness coverage plus $ 25,000 in place wrong liability coverage, much expressed as 25/50/25. That ‘s merely the minimal ; drivers can and frequently should buy more coverage than that, specially if they have significant assets to protect from a lawsuit. For exemplar, rather than 25/50/25, a driver might buy 100/300/100 or 250/500/100, which will naturally cost more .
calm another component in the case of collision and comprehensive coverage is the deductible the policyholder chooses. That ‘s how much the policyholder has to pay out of pocket before their insurance kicks in, and the lower the deductible, the more their insurance will cost. For example, a policy with a $ 500 deductible will be more expensive than one with a $ 1,000 deductible .
How to File a Car Insurance Claim
If you ‘ve been in an accident or your car has been damaged in some early way, you should notify your policy company a soon as possible. It will assign a claims adjuster, whose job is to assess the damage and determine how much the insurance company is obligated to pay you under your policy. ( If you disagree with the total, you can challenge it. )
Ask your insurance company what information it needs to process your claim. It might, for example, request that you send photos of your damage car via text, e-mail, or through the indemnity company ‘s app. You should besides save any documentation, such as a patrol report if there is one, and a receipt if you had to pay for your car to be towed. If another driver was involved, you ‘ll want to provide their mention and indemnity information to your insurance company .
Your insurance company may have a list of approve haunt shops that it works with, although you are besides free to choose your own. When your car is repaired, the indemnity company may pay the shop directly or reimburse you if you pay. Either way, you ‘ll be creditworthy for covering your policy ‘s deductible .