Nearly all drivers are mandated to have at least a minimum amount of car insurance coverage to cover costs associated with accidents. However, even in areas where coverage is not required, drivers are given the option to carry insurance. This makes them liable for the damages they cause.
Traditionally, most drivers will opt for full coverage which includes coverage for both liability and damages. Despite the name, full coverage does not cover everything that could happen to a vehicle. Therefore, drivers must work with their insurance companies to choose and craft the best auto insurance policy for them.
The fixed amount a driver pays in insurance fees per month is called an insurance premium. These premiums are dependent upon what coverage a driver selects, along with their driving record. Each state has their own minimum level of coverage, but there are other optional policies as well.
Collision and comprehensive insurance
Aside from full coverage, drivers can select other options such as collision and comprehensive. Collision coverage is designed to help those drivers involved in a collision with another vehicle and provides payments to repair the damaged vehicle. Basic liability coverage only pays for damages to other vehicles, not their own.
Comprehensive insurance covers all other incidents that might damage a car aside from an accident. By choosing comprehensive coverage, drivers are protected from fires, vandalism or other incidents.
Both collision and comprehensive coverage are optional and carry a deductible. This deductible can directly affect a user’s premium. The higher the deductible is, the lower the premium may be. However, with a higher deductible the user has to pay a greater amount out of pocket.
Uninsured motorist insurance
Uninsured Motorist is another type of insurance coverage. This protects a policyholder if the responsible party in an accident does not have insurance and cannot afford to pay for damage caused.
While auto insurance is mandatory in nearly every state, not everyone follows the law. One recent estimate found more than 20 percent of drivers in some states don’t have coverage.
If someone is hit by a driver without insurance, the only option to recover those costs may be a time-consuming lawsuit. Even that may be fruitless if the other driver doesn’t have much money.
Drivers can also choose to add medical payments coverage to their insurance policy to pay for any injuries sustained in a crash. While many of these costs may be picked up by their health insurance company, medical payments coverage can help supplement that coverage or pay for the deductible.
The final costs of all of these options vary widely based on a number of factors, such as the make and model of the vehicle and the policyholder’s driving record. Comparison shopping may be the best strategy to employ when seeking the most cost-effective coverage.