Auto Insurance (often called Car Insurance) is a policy designed to compensate for the costs associated with accidents. Many people purchase because the law says so. They are oblivious to the many benefits that come with an Auto Insurance policy.
Auto Insurance policy plans offer financial protection in case of vandalism, theft, towing, hail, fire, road accidents, floods, and even animal contacts. Though, the particulars outlined in each insurance policy vary depending upon the legal regulations of different states.
How Does Auto Insurance Work?
When you sign up for Auto Insurance, you agree to pay premiums to the Auto Insurance company. In exchange for those insurance payments, the company agrees to pay for the losses suffered in case of an unexpected event. At first sight, paying low premiums might seem like a more fascinating option, but it comes with risks. The insurance charges that have to be paid are determined by many factors including age, driving experience, moving violation history of the insured, educational level, zip code and many other factors.Auto Insurance policy plans offer financial protection in case of vandalism, theft, towing, hail, fire, road accidents, floods, and even animal contacts. Though, the particulars outlined in each insurance policy vary depending upon the legal regulations of different states.
Coverage is an extent to which an Insurance policy gives you protection. You may be protected by different coverage levels based on what Car Insurance policy you purchase. Auto Insurance provides coverage for:
• Property Damage
Liability Coverage comes to your rescue when you are involved in an accident and you are held legally responsible for the damages caused by you.
Suppose you’re going back to your home after work.You are drowsy and you end up bumping your car into another vehicle. Let’s suppose nobody gets injured but, you cause significant damage to that vehicle. You might get sued by the other vehicle-owner. Since you are at fault, you are legally liable to compensate for the harm you caused to the other vehicle.
What happens if you don’t have Auto Insurance Liability Coverage?
If you don’t have Liability Coverage in your car insurance policy and the vehicle owner institutes legal proceedings against you, you will have to pay a massive out-of-pocket amount to that vehicle-owner. You’ll have to compensate for the property damage yourself. These heavy out-of-pocket payments may even include colossal legal expenses. And you certainly don’t want to put yourself through this daunting situation.
What happens if you have a Liability Coverage in your Auto Insurance Policy?
If you are insured with Auto Insurance Liability Coverage and you end up rear-ending a vehicle, you can take a deep sigh of relief even if you are at fault. With Liability Coverage, you don’t have to agonize over recompensing the property damage you caused because we pay for the damage you are legally liable to pay for. We subsidize the damage caused and pay for the replacement and repair of the damaged parts of the vehicle. But, all of this works up to a certain limit. Limits are set beforehand and are outlined in your Auto Insurance policy. As mentioned before, you have the freedom to set a price on the coverage you sign up for i.e. you can set these limits yourself.
At times, the legal situation aggravates depending upon who the third party is. Suppose, you end up ramming your car into a telephone tower and now the telephone company sues you. Now, you are arraigned on motor vehicle collision charges. Without Liability Coverage in your Auto Insurance Policy, this will prove to be a disaster for you. The corporate lawyers of the telephone company might make you compensate for all losses including the loss of services that the collision might cause.
Auto Insurance Liability Coverage also stands valid in case you end up bumping your car into a street hoarding. In this case, if you are insured with a Liability Coverage, you don’t have to panic because all those expenses will be paid by us. Auto Insurance Liability Coverage also pays for all legal fees like court costs. However, this also works up to a certain limit that is set beforehand and is outlined in the policy.
Now, let’s suppose you are involved in an accident that you are responsible for. Only this time you caused both Property Damage and Bodily Harm. All the passengers in the vehicle are severely wounded and need medical attention. In this case, you are not only liable to pay for Property Damage but also for the medical expenses of the injured. The good news is that Liability Coverage offered under Auto Insurance provides protection against liability in case the insured driver is held legally liable in any accident. All medical bills are covered under the Liability Coverage of your Auto Insurance policy. From on-the-spot arrival of an ambulance to injured person’s medical expenses, an auto insurance policy may incorporate everything.
Liability Coverage provided under Car Insurance pays for many additional costs like bail expenses, court fees, and all other legal costs. In many cases, it can also cover for many other things like pain and suffering of the injured person including the loss of income that the injured person might face. However, this also works up to a certain limit as stipulated in the Car Insurance contract you signed.
Under Auto Insurance, you can get liability coverage either as a split limit or combined single limit.
1.Split-Limit Auto Insurance Liability Coverage
Split-limit Auto Insurance Liability Coverage basically divides your Bodily Injury Liability Coverage and Property Damage Liability Coverage. Property damage to the driver’s vehicle is covered under Property Damage Liability Coverage, and medical expenses of the injured passengers are paid under Bodily Injury Liability Coverage.
Bodily Injury Liability Coverage is further divided into:
• Maximum payment per person
• Maximum payment per accident
2.Combined Single-Limit Auto Insurance Liability Coverage
Combined Single Limit Liability Coverage combines property damage liability coverage and bodily injury liability coverage. Both coverages are included under one single combined limit.
If you have a Combined Single Limit Liability Coverage and you bump your car into another vehicle and end up injuring the driver and the co-passengers in the vehicle, all payments to compensate for the property damage and injury claims would be covered under this one combined limit.
Now, that you are aware of the many benefits that come with Auto Insurance Liability Coverage, the question that must have instantly popped in your mind is how will you pay for the damage your car undergoes or the injury you and your co-passengers sustain in case the third party is at fault and the driver is not insured? This is where Uninsured or Underinsured Motorist Policy comes into play.
Uninsured or Underinsured Motorist Policy (UM/UIM)
Almost eighty percent of the vehicles on the road are not insured. You must be wondering if an uninsured vehicle bumps into your car, how are you going to pay for all the losses suffered? They may not be able to pay for the losses you suffered because they may not be protected with liability coverage.
Well, if your Auto Insurance policy has Uninsured/Underinsured Motorist coverage, you are going to be fine. This policy lets you easily pay for yourself and all the wounded co-passengers. Under this policy, the company will first pay for the losses suffered by the insured and then subrogate from the party at fault.
This policy incorporates two features:
Uninsured Motorist Policy
In case the vehicle that rear-ended your car is not insured, all the payments including all medical and repair expenses will be covered under this policy.
Underinsured Motorist Policy
In some cases, the driver is not uninsured but underinsured. The driver might have insurance to recompense some of the losses incurred but not enough to cover all the expenses. In this case, Underinsured Motorist Policy comes to your rescue and helps you pay for the remaining expenses.
Let’s suppose you are badly injured in a road accident and you are the party at fault. In this case, no other party is going to compensate for your losses. Medical Coverage helps you pay for your medical bills in this case.
Medical coverage or Med-Pay is essential if you want to save yourself from the nerve-racking ordeal of having to pay a gigantic out-of-pocket sum of money while you are lying wounded on the hospital’s bed. Medical Coverage is particularly useful for passengers who are not insured for health.
Now, the question arises whether or not the people with Health Insurance should sign up for Medical Coverage. The answer is a big “yes” as Health Insurance in many cases makes the policyholder pay out-of-pocket before the insurance company offers any compensation. These out-of-pocket payments are called deductibles. The deductibles stated in an individual’s insurance policy applies to each person in the car. If you are insured with Med-Pay and have Health Insurance, your stress will be significantly mitigated. Medical Coverage policies may comprise different types of compensation
Medical Coverage pays for all medical expenses. This includes all visits to the doctor, all surgeries, x-rays, tests, emergency technical fees, medicines, and even prostheses. All of this usually comes without any paperwork. The timely arrival of an ambulance to the spot of the accident is also included in Med-Pay. Med-Pay can also cover the costs for professional nursing services. The compensation you’ll get depends on what is stipulated in the agreement you signed.
Med-Pay is all you need to get back on your feet after an accident with very little out-of-pocket expenses. Med-Pay makes sure you get back to your feet swiftly and have the best recovery possible.
Medical Coverage policy incorporates an additional feature. This feature reimburses for many important services that you are not able to do because of your injuries. These services might include managing households, lawn-mowing, and many other essential tasks.
Property Coverage primarily includes:
• Collision Coverage
• Comprehensive Coverage
Collision coverage provides protection to the cars that undergo collisions. When a car undergoes a collision, it suffers great damage. The collision may be an impact with a pedestrian as well. Collision Coverage is specifically designed to reimburse the expenses needed to repair the damaged car.
At times, the car suffers great destruction due to the collision and cannot be repaired. This is a total loss or write-off situation in which the cash value of the vehicle is paid out to the insured as the vehicle is totaled. Collision coverage is not compulsory. Though, if you are taking a car on loan, lenders usually require you to carry collision coverage for a specific duration or until the car is completely paid off. Deductibles are applicable to Collision Coverage.
Comprehensive Coverage can be availed when your car suffers damage due to vandalism, theft, fire, weather, or contact with non-human animals.
If your car is damaged by incidents that are not deemed as collisions, Comprehensive Coverage helps you compensate for the losses suffered. The coverage provided under Comprehensive Coverage is subject to a deductible. Moreover, events that are considered as the “Acts of God” are enlisted as an aspect of this coverage. These are the events that are out of human control such as floods, hurricanes, hail storms, or tornados.
Rental Reimbursement Coverage (Loss of Use Coverage)
If you run a taxi or rental car business, this coverage is for you. Transportation expense coverage or rental coverage pays for rental expenses while your car is being repaired at the service station because of a covered loss.
Roadside Assistance Coverage (Vehicle Towing Coverage)
All vehicles go through mechanical malfunctions. You must have faced mechanical problems with your car like flat tire, gas outages, or dead battery at some point. These problems require roadside assistance. Roadside assistance in most cases requires exorbitant labor and towing costs. However, with Vehicle Towing Coverage in your Auto Insurance policy, you don’t have to be worried about paying extortionate labor and towing costs. This coverage pays for emergency roadside services. However, these payments work up to a limit stated in the policy.
Vehicle Towing Coverage also comes with Comprehensive Coverage. Under Comprehensive Coverage, this coverage can be availed at any time but it only covers the towing cost associated with the accident that is covered under the Auto Insurance policy and does not provide coverage for non-accident tows that are associated with mechanical breakdowns like gas outages and dead batteries. This void, however, is filled with Car Towing Coverage that will cover the costs for all tows related to mechanical problems.
Personal Property Coverage
Roadside accidents often damage personal items kept in the vehicle. Auto Insurance policy typically provides no coverage for the items that may be damaged due to the accident except some unattached GPS devices intended for vehicle use. These items can be claimed under a home insurance or renters’ insurance policy.
Suppose, you are driving your car and a rock comes out of nowhere and hits your windshield and leaves a huge crack on it. In this case, your comprehensive coverage can pay to get the windscreen repaired as any damage caused by events such as hail, theft, vandalism, or a rock hitting the windscreen of your car are covered in Comprehensive Coverage.
In most cases, glass coverage is a part of comprehensive coverage. But, there is a fine difference between glass coverage and full glass coverage. If your car suffers glass damage, you are required to file a claim through Glass Coverage.
After filing the claim, you’ll be referred to a repair shop and your windshield will be repaired or replaced based on what is required. This coverage can also include mobile glass repair services.
Everybody aspires to get affordable Auto Insurance. However, buying the cheapest Auto Insurance policy available may not be a really wise thing to do. Inexpensive policies come with risks and don’t provide all kinds of coverage. When you get Auto Insurance for your car, you have to pay premiums. In most cases, premiums are to be paid monthly. There are several factors that decide the amount of premiums. These factors primarily include:
• Type of car
• Type of job
• History of insurance
• Moving Violation History
In exchange for premiums, the company agrees to recompense the losses as stated in the policy. The company may not pay for all of your losses. What losses the company agrees to pay for depends on several factors. The insurance premiums are at times mandated by the government. Different states have different frameworks of regulations regarding this. From your neighborhood to your driving history, everything is taken into account before the policy is outlined.
Now, that you are utterly briefed on the benefits and specifics of Auto Insurance, you can decide for yourself what coverages you want in your policy. Contact DEFY’s Insurance Agent right now and sign up for Auto Insurance Policy.