If you own a vehicle, getting auto insurance is essential. In case of an accident, car insurance covers damages to your car and the people involved in an accident. Moreover, if you were responsible for a car accident, it covers the damages of the other person’s car. Hence, car insurance protects you financially and gives you peace of mind as well. Apart from car accidents, a car may be damaged due to natural disasters. In this case, car insurance can help you as well.

Before you get car insurance, you must have some basic knowledge regarding it. You must understand what factors make car insurance premiums high and low. This knowledge can help you save money in the long run. 

Types of car insurance programs

There are various auto insurance coverage programs. You must understand what you require from car insurance. These are as follows:

Basic (Liability) Coverage

The basic coverage program provides liability insurance. It means that in case of an accident (when you were at fault), the insurance company will pay for the damages to the driver of the other car. A basic coverage policy covers the cost of medical bills. It also covers the damages done to a property. 

Personal injury protection

If you sustain injuries in a car accident, personal injury protection covers your injuries and other medical bills. In some cases, it is mandatory to purchase a PIP limit set by the country or state. You can increase the limit if you wish to do so.

Comprehensive Coverage

Comprehensive coverage provides compensation for instances other than a car accident. If a thief stole your car, the auto insurance company would cover your losses. Also, if you were to hit an animal, comprehensive coverage is what you need to cover for damages. Likewise, in the case of natural disasters, comprehensive coverage is applicable. 

Collision Coverage

Collision coverage plans provide compensation in case your car was completely damaged in an accident. The insurance company also covers damages if you hit a pole, tree, fence, etc. 

If you plan to get collision coverage, you also need to get comprehensive coverage. 

You can find more information regarding car insurance plans offered by various companies on https://www.trulyinsurance.com/.

Understanding car insurance premiums

It is good to have an understanding of the various terms associated with car insurance. Some of the important terms are as follows:

Premium

It refers to the amount that a person pays to the car insurance company. 

Deductible

Deductibles refer to the amount you pay (out of pocket) in case of a claim. You can set the deductible amount. If your car was damaged and you agreed to a deductible amount of $400, you will pay the $400 out of your pocket. The insurance company will pay the rest of the amount.

Insurance limit

The insurance limit refers to the maximum amount of money that an insurance company will pay for a claim. If you have a higher insurance limit, you will end up paying higher premiums on car insurance. 

The premiums one pays on car insurance depend on various factors. With a poor driving record and a low credit score, you are more likely to pay high premiums. Moreover, if you have children, they will be included in your car insurance policy. In addition to this, your age, type of car you drive, mileage, and other factors determine the amount of the premium you pay. Hence, you will have a higher premium on car insurance. 

Conclusion

Car insurance helps protect you and your loved ones in case of a car accident. Moreover, it provides financial assistance in clearing off your medical bills. Hence, having a car insurance policy is essential.