Car insurance may seem like an unnecessary hassle to some of us. Perhaps the high cost and the misconception that it gives nothing in return distort our perception. In truth, however, car insurance is not a sunk cost.
The latest models, trendiest colors, and best safety features take secondary precedence compared to car insurance. Here are the reasons why:
1. Protects You Financially
Accidents are an unpredictable life event, and you may be fortunate to never meet with one during your life. However, as statistics prove, more than a million people experience car accidents every year, in which many lose their lives while others sustain injuries.
In an event, the cost of an accident you caused or met with can be expensive. If you were the one at fault in the accident, you would have to bear a huge bill for the damages in the absence of insurance coverage. Furthermore, you will also be in trouble legally for not having insurance coverage because most states make it mandatory by law.
Even a PLPD will relieve you of some of the costs you will have to incur when you are at fault in an accident. PLPD is the minimum coverage the law states as compulsory. While PPD will not cover damages to your car, it will cover you for other losses. These include:
- Your medical costs (only if you are living in a no-fault state)
- Property damage
- Sufferings, pain, and injuries others suffer (dependent on the state laws)
2. Provides Repair Costs For Physical Damage
Car insurance can also provide for your vehicle’s reparation costs, depending on what coverage you settle for. In physical damage, you can choose between collision and comprehensive coverage, each of which comes with its own rules.
Collision coverage provides for your vehicle for damages from accidents with mailboxes, trees, automobiles, light posts, and inert objects. You can claim collision coverage when you caused the accident or are unaware of who damaged your car. Before you can get your repaired vehicle back, you will have to pay a specific deductible.
Comprehensive coverage is to cover for all other damages that do not fall under collision. These include storm damage, rats, deer, thefts, fire, and vandalism. You generally require comprehensive coverage to buy collision coverage or to gain roadside assistance.
Other Types of Car Insurance
There are some other kinds of coverage as well in car insurance, apart from a collision and comprehensive coverage. Some of these may be optional in your state while some mandatory, depending on the laws that regulate these.
1. Coverage for Underinsured and Insured Motorist
This coverage provides for your medical and repair bills to your vehicles in the event an uninsured motorist hits you. If an underinsured driver hits you, it means he/she has car insurance, but it is not sufficient to cover your medical bills. In this case, coverage for underinsured motorists comes to the rescue.
2. Liability Coverage
As a compulsion, several states set a minimum amount of liability coverage by law that you have to purchase. Two components make up the liability coverage:
- Liability for property coverage is the component that helps you pay for the loss you cause to other people’s property while driving
- Liability for bodily injury covers the medical costs when you have injured another person by accident.
3. Protection against Personal Injury
Only individual states offer PIP (personal injury protection), which covers your medical costs for the injuries you sustain in an n accident. PIP may also provide funds in events where you lose your income due to an accident of childcare costs etc.
4. Coverage for Medical Payments
This coverage provides for injuries that you, your family members, or passengers may sustain while traveling in your insured car. Medical coverage may provide for hospital visits, x-rays, surgery, and other costs.
When compiling your car insurance policy together, there are more coverage options that you can add, as suits your needs. For this purpose, you must sit with your insurance agent to go through each option to understand what it offers and what costs it will cover for you. A thorough understanding of the whole car insurance concept is compulsory before you purchase a policy.
The other options include:
- Classic car insurance
- Sound system coverage
- Ride-sharing coverage
- Labor and towing cost coverage
- Coverage for new car replacement
- Gap coverage
- Transportation expense and rental reimbursement coverage
It is important to note that the details mentioned above vary as per the laws that govern your state. In some states, it is mandatory by law to pay a minimum for coverage while others are optional. You must, therefore, update your information before you get a policy.
A car insurance policy is a necessity for all car owners all over the world. Your vehicle remains vulnerable in the absence of insurance coverage, and so do you. Laws that govern car insurance regulation vary per state, and it is essential to know what you are signing up for. A detailed discussion with your insurance agent is always crucial to understand the different components of car insurance.
Sources: https://www.allstate.com/tr/car-insurance/components-auto-insurance.aspx https://economictimes.indiatimes.com/everything-you-ever-wanted-to-know-about-car-insurance/tomorrowmakersshow/69426459.cms https://www.thebalance.com/what-is-car-insurance-for-527458
- Posted by Pingchang Yang
- On June 19, 2020