Driving a car is among the more popular methods of personal transportation, and most drivers are required to purchase auto insurance per state law. Some drivers must purchase additional coverage to comply with their auto lender’s insurance requirements. Even without requirements for coverage, it makes sense for drivers to be fully insured. A closer look at common coverage requirements and types may help you to protect yourself against financial losses through your car insurance.
The three primary auto insurance types are collision, comprehensive and liability insurance. Most states require drivers to take responsibility for any damages they create on the road. Liability insurance is a common state insurance requirement because it provides compensation to others if you are the responsible party. This compensation may pay for any medical expenses, car repairs and other expenses that you create for others. It does not, however, pay for your own expenses.
Auto lenders commonly require collision or comprehensive car coverage. This is because the vehicle is the loan collateral, and these two coverage types pay for your vehicle repairs. Because of this, you may prefer to add these coverages to your policy even if you are not required to do so. Collision insurance specifically pays for your car repairs after an accident, and comprehensive insurance pays for expenses for a much wider range of causes. There are also other types of insurance available to you upon request. For example, you can purchase rental car coverage, towing coverage, personal injury coverage, personal property coverage and more. You may be able to adjust the coverage limits for these various options as well. Remember that the insurance company only pays benefits up to the coverage limit.
When you purchase your new insurance policy, keep in mind that the deductible amount is selected at your discretion. A $500 deductible is common, but you can request a higher or lower deductible. This is the amount of each insurance claim that is your responsibility. Therefore, choose an amount that is reasonable and affordable. Be aware that a lower deductible results in a higher premium, and a higher deductible creates a lower premium.