An auto insurance policy is the contract between a car owner and an insurance company that protects the insured from financial loss, legal complications, injury, and property damage caused by or to their automobile. This policy involves car owners paying a set recurring premium for a stipulated period to an insurance company while the insurance pays for any damages accrued from accidents or peril covered in the policy. Understanding auto insurance can be a bit tricky and having the right information can save you from a lot of mistakes. To help you out, car insurance San Angelo has prepared this article with extensive information on the typical components of an auto insurance policy.
Important Terms in Auto Insurance
There are several important terms to understanding auto insurance. These include;
- Premium – This refers to the cost of the insurance policy, which is calculated based on the type of car, the track record of the driver, and the likelihood of their occurrence. For instance, if you are insuring a classic car but have a poor driving record, you will be expected to pay more premium than someone with a less expensive car and a good driving record.
- Policy Limit – This refers to the amount that the insurance company will pay for the insured loss in the period the policy is agreed upon. This is usually a 6-12 months renewable period. This also depends on several factors, such as the cost of the insured vehicle and the likelihood of the insured loss.
- Deductible – This refers to the amount of money the insured is required to pay out of pocket for the repairs or towards a certain loss. In most cases, it’s either $500 or $1000. This mostly occurs in a comprehensive cover but is later reimbursed by the insurance company. A higher deductible would result in a lower premium, but it is important to be sure you can cover the stipulated out-of-pocket payment when you need to file a claim.
Reasons for Having Auto Insurance
- It is required – It is illegal to drive a car without insurance as this is seen as a danger for you, your car, other people, and property in general.
- It protects you – Insurance helps protect you both financially and health-wise. Being involved in an accident can set you back thousands of dollars in medical costs and repairs for both your car and others if not insured against.
- It is required by lenders – When looking to finance your car, lenders will always require you to have both comprehensive and collision insurance covers, which cover repair costs and replacement of the car.
- It protects your passengers – Medical payment coverage ensures that your passengers or occupants of your vehicle during an accident are taken care of their medical expenses.
Types of Auto Insurance Policy
Auto insurance policies vary depending on the state the insured lives in, although 3 main covers are generally required in all states. These include; liability insurance, comprehensive insurance, and collision insurance.
This is the most fundamental cover out of all the available covers. While most state laws require drivers to purchase at least the legal minimum amount, we advise you to at least exceed the set minimum just for your well-being.
This policy covers;
- Bodily injury – It covers all the medical costs of a third party that has been caused by the insured vehicle.
- Property Liability – This policy covers all the property loss caused by the insured vehicle, including other vehicles or structures.
This policy covers all the losses accrued from the destruction of your vehicle from forces out of the insured ability, such as vandalism, fires, floods, or any other cause other than collision.
This is mostly optional but mandatory if you are still financing your vehicle, as the lender usually requires it. If the loss insured happens, you will incur a deductible that is equal to the sum stipulated in your agreement, and the insurance company will cover the repair cost or the cost of replacing your car.
This policy covers any loss that occurs due to collision, whether caused by the insured or a third party. It covers all repairs or replacement costs of the vehicle with the help of your deductible.
This cover is similar to comprehensive as it is only mandatory if the car is being financed but can be optional if it is paid off. You should note that this policy only covers the insured vehicle and not the other party involved in the collision.
Medical Payment Coverage
This is an important policy to have as it covers all medical costs for all the people in your car during an accident. Most states do not mandate vehicle owners to have this, but it is always advisable to own one, especially if you carry any passengers or allow other people to drive your vehicle.
Personal Injury Protection
This policy typically covers three main parts;
- Medical costs – This covers all medical costs, including procedures and doctor visits, for up to 3 years after the accident or up to $10,000 or whichever comes first.
- Income loss – This policy covers all the income lost by the accident and in most comprehensive covers, it is calculated up to &700 per week.
- Expenses – This involves all the expenses accrued due to the accidents such as child support.
Thirteen states mandate policyholders to own this cover unless they sign a waiver rejecting this coverage.
Uninsured/Underinsured Motorist Coverage
This is a policy that covers the insured when involved in an accident with a third party that is either not insured or whose policy limit is insufficient to cover repairs of the insured vehicle.
Classic Car Insurance
This is a specialized insurance cover that is designed for antique and classic cars that are for exhibition purposes and minor transportation use.
Owning a vehicle comes with a lot of risks and responsibilities. To enjoy your investment, it is always advisable and legally required to cover it against most of the uncertainties that may occur. Visit https://sanangelo-insurance.com/automobile_insurance/ to find out more about your needs and which type of covers are best suited for you.
San Angelo Insurance,
1102 N Chadbourne
San Angelo Texas 76903,
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