Automobile Insurance Ultimate Guide | Everything You Need to Know about It

The moment people leave their homes they are at risk. No matter where they go and what they do, something unpredictable and dangerous can happen, throwing them in debts and ruining their peace. Cars, as the main means for transportation to many, aren’t spared, as well.

The list of damages provoked both by the other participants in the traffic and the owner of the vehicle is huge. That’s why people should protect themselves and their cars by getting an insurance. However, this is a very wide topic full of uncertainties and unanswered questions. To help you get a hang of it, in this guide we’ll go over the things you should know before making the final decision about which car insurance to get and why.

Basics of Car Insurance

The basic use of the automobile insurance is to provide financial protection against a wide variety of damages such as physical damage from traffic accidents and different kinds of liabilities.

And that’s not all. Moreover, the insurance can widen its financial protection to include protection against stealing, acts of vandalism, and even incidents concerning natural disasters.

The term car insurance is sometimes linked to mechanical damage. But let’s break down what that means. If the mechanical damage of the car was initiated by an external factor or a third party, then the car insurance would cover the mechanical repairs. If not, you’ll have to provide for the mechanical repairs on your own.

What’s interesting is that before the First World War, people didn’t really talk about automobile insurance. Even though the cars were quite fast and posed danger, people involved in car incidents very rarely got any financial compensation. That changed soon. The roots of the automobile insurance were planted in 1930 in the United Kingdom when an insurance scheme was developed. With it, drivers who owned a vehicle were supposed to be insured against the possibility of an injury or worse, death, to other people while the vehicle was driving on a public road.

Why You Need It

Besides the obvious benefits such as the ones that the automobile insurance pays for repairing damages caused by collisions with animals, repairing damages by flood or fire, there are other reasons why you need it, too.

With car insurance, you can get a no-claim bonus. What is that, you may ask. If you don’t make a claim on the car insurance while the policy lasts, you get a no-claims bonus, which later gives you a discount when you want to renew it. Of course, there are multiple terms and conditions which you have to fulfill. Depending on the insurer, you can get additional discounts in certain situations.

Moreover, in the sad event of your car being totaled, insurers usually pay you the sum of money which equals the value of your car before the horrible accident minus the deductible.

Types of Car Insurance

In many law systems, it’s mandatory to have a car insurance. There’re even countries where both the driver as well as the vehicle must be insured. Despite that, even in countries where you don’t have to get an insurance by law, the benefits it brings are easy to spot.

So, now let’s take a look at some of the most common types of car insurance you can find available on the market:

• Collision Coverage – This insurance type covers the expenses in the event of an accident. Also, owing money on the car is usually the cause for getting this type. What’s important here is to carefully choose the right deductible or the sum of money that you have to pay yourself before the policy comes into effect.
• Uninsured Motorist Insurance – Sometimes called underinsured motorist insurance, this type is applied when getting in an accident with an uninsured or underinsured driver, as the name suggests. Before you decide to purchase this coverage, you should take into consideration the area as well as your current situation and even the situation of the people around you. Some statistics say that the number of drivers who are underinsured or uninsured is great.
• Liability – Since it’s protecting you from lawful as well as financial consequences, it’s one of the vital qualities in an insurance type. What distinguishes it from the others is that this one kicks in when you’re guilty of providing harm to others and not yourself nor your car.
• Comprehensive Coverage – With the comprehensive insurance, your vehicle is covered against fire, stealing, and other weather incidents. It’s considered to be an extension of the collision coverage. Even in minor occurrences such as a small stone hitting your windshield, this coverage takes care of that. If you decide to lease or even finance your own vehicle, it’s very likely that the bank will want this insurance type.

What’s more, there is an insurance plan called pay-as-you-drive which is still experimented with by numerous countries. Furthermore, it involves a tracking system established in the vehicle or its diagnostics and this tracking system charges according to the miles or kilometers that the owner has driven.

There’re certain options for extensions of the car insurance. For example, auto repair insurance is offered in the United States, in all fifty states. It protects the car against the natural wearing and ageing and it’s totally unrelated to any accidents or incidents that may occur on the vehicle. Usually, it doesn’t provide coverage against keying or any natural disasters or collisions.

Some Final Words

All things considered, purchasing a car insurance isn’t a simple decision at all. Starting from the types of insurance to the price and benefits, there is truly a bunch of stuff to consider. But eventually, everything comes down to whether you are financially ready to make this step and whether you like to be assured of the safety of your vehicle. So, what do you think about this? Have you ever paid for a car insurance? Or would you pay for it? We like to hear it all.