WHAT IS CAR INSURANCE?
WHAT IS CAR INSURANCE?
Car insurance also referred to as auto insurance, is the specific type of insurance made for owners of automobiles. It serves as an investment done by vehicle owners to protect their automobiles against huge amounts of expenses related to their autos should something happen. This includes unfortunate events like car accidents, theft, damages by either man-made or natural catastrophes, vandalism, etc. Car insurances typically cover vehicular repairs for the insured automobile, medical, and/or funeral expenses associated with car accidents, and property damage liabilities in case the situation necessitates such. For most states and countries, securing car insurance is a requirement when you decide to own a vehicle.
How Does Car Insurance Work?
As mentioned, it is usually mandatory insurance for an individual before owning a vehicle. A personal auto insurance policy covers the policyholder/insured as well the dependent/s specified in the contract. These insured people will be covered under circumstances that utilized the vehicle for personal purposes like driving to work, to the grocery, running errands, going on a vacation, etc. This does not include using the vehicle for commercial purposes like for delivery or ride-sharing with passengers. Commercial auto insurances carry this responsibility.
Receiving the benefits of the car insurance does not automatically happen once an accident or situation happened in relation to the vehicle and the insured individuals. An insurance claim shall be filed first and the insurance company will then process the necessary payouts. In another light, a car insurance claim against you can also be filed by another person, seeking you to pay for damages or bills associated with an accident or destruction that you and/or your vehicle have caused the other party.
What are the Coverages of a Car Insurance?
There are various types of coverage when we talk about car insurance. These vary depending on the type of people who need it and the nature of each coverage. Coverages of car insurance include the following listed below. It is also the coverage of each insurance that primarily differentiates one type of insurance from another.
• Bodily injury liability coverage
• Collision coverage
• Comprehensive coverage
• Gap coverage
• Glass coverage
• Personal injury protection coverage
• Property damage liability coverage
• Uninsured or Underinsured motorist coverage
How Much do I need to pay for Car Insurance?
The premium per month or per annum that you have to pay for your car insurance policy is dependent on several factors, one of which is the coverage your policy promises you. The most basic coverages equate to lower premiums as compared to insurance with more coverage, all other factors considered constant. The other factors these insurance companies take into consideration in determining the premiums for your policy include the following: (1) the type of your car and its features, (2) your relevant demographic background, (3) your driving records, and (4) your credit rating.
The Type of Your Car and Its Features
Depending on the market price of your vehicle – either an affordable or a luxurious one, its size, and the features, your premium varies. Expect a higher premium with more expensive cars because the insurance coverage also equates to more pricy expenditures. Case in point: vehicular repairs and the parts that need to be replaced. Its size and the premium also have a direct relationship, meaning the larger the size of the vehicle, the higher the premium. Automobiles with basic security and other safety features also tend to have a higher premium as compared to those with advanced features. The idea behind this is that advanced security and safety features safeguard the vehicle should there be an accident and damages, minimizing the expenses that the insurance shall have to cover.
Your Relevant Demographic Background
This pertains to the demographic information of the policyholder. Among these, age and gender are two primary considerations. According to actuaries and their data, young drivers, starting from the legal age of 18, are more susceptible to vehicular mishaps. Younger drivers are also considered to have less driving experience, and thus there is a higher risk. To compensate for this risk, insurance premiums for them are usually higher. Furthermore, a number of studies also conclude that men carry more risks when it comes to their driving behaviors in comparison to women. This is based on the no. of vehicular accidents each gender is involved with, and the respective rate of severity. However, do note that this isn’t always the case in every state or country. It isn’t a general rule of thumb in calculating the car insurance premium per policy, instead only the observable trend in most locations around the globe.
Another part of the demographic background is the location where the vehicle owner is residing and the parking arrangement for the insured automobile. Insurance companies are concerned whether it is in an urban or rural area because theft, accidents, and the likes are more common and expected in urban locations. This means policyholders can expect a higher premium if they reside and park their vehicle in an urban area.
Your Driving Records
Particularly with driving records, insurance companies usually look into the annual mileage of the policy applicants. The idea behind this is that the more time you spend behind the wheel, the more likely you are to be involved in an accident, hence lower annual mileage lowers the premium as well as the interest rates on the policy. Similar to this, the record of driving violations incurred by the individual in the past also affects the insurance price directly. This is because these violations help in determining how risky as a rider you are, and the riskier it is, the higher the premium will be. Some of the records that are usually reviewed are the speeding violations and tickets, involvement in accidents that proved to be your fault, and the driver under the influence (of drugs or alcohol) or DUI convictions which pose more serious complications.
Your Credit Rating
To say it simply, the better your credit rating is, the lower the premiums will be for you. This is backed up by your credit history with banks and other financial institutions which is something that insurance companies also review and evaluate to calculate the fitting premium for you and your financial capacity. Insurance companies will be inclined to trust that you will be able to pay your premiums in a timely manner and abide by the policies enclosed in your insurance if you have a commendable credit rating.
Where can I get Car Insurance?
As most of the time getting car insurance is part of the process before you are legally allowed to acquire and use your own vehicle, it is best to inquire on these car companies where to get your insurance. Most often than not, they also have recommended companies or partners that you can work with for convenience on both parties. There is also the option for you to get more car insurance to increase your and your vehicle’s protection against unfortunate circumstances. Now that almost everything can be transacted online, you can also scout for insurance companies and apply directly online.