Automobile insurance primarily serves to lessen the financial burden on someone involved in an accident. However, it can also cover other damages, including damage from weather, fire, vandalism, theft, and collisions with animals. Some insurance plans also cover services such as towing, jumps, tire changes, roadside labor, and locksmithing. The different types of coverage are briefly touched on in this FAQ from the DMV.
If you’re a new driver, or even if you’re just looking to change your coverage, then it pays to know exactly how auto insurance works and how it can benefit you.
Why Does One Need Auto Insurance?
In the United States, insurance is not optional. If you have a car and do any driving on the public road system, you will need insurance. The penalties for driving without insurance can be incredibly steep. If you’re found to be driving without auto insurance, then it could result in tickets, fines, or even the loss of your license.
However, even if you only drive on private roads, for example, roads owned by an individual or a homeowner’s association, it’s still incredibly wise to have insurance. Having insurance can be the difference between having to pay out of pocket for any damage, either to your car or someone else’s, and having most or all the costs covered by a company with millions of dollars at their disposal.
Choosing the Right Amount of Coverage.
There are a dizzying number of options when it comes to auto insurance coverage. Choosing the coverage that’s right for you can be tough, especially when you’re also trying to keep your insurance affordable. So what kind of coverage should you get?
The answer really depends on your situation, meaning how much coverage you can afford, the kind of accidents and natural disasters that are common in your area, and a multitude of other factors. These factors can include things such as your average driving distance, whether or not you know how to change a tire or unlock a car door and any number of other things.
But no matter what your financial situation and your specific circumstances, liability insurance is required by law in most states. If you have liability insurance, then any damage that you cause will usually be covered. Collision coverage is also highly recommended, as it covers damage to your own vehicle in the event of an accident, so you won’t have to break the bank if you end up in an accident.
How Does Insurance Work After a Collision?
If you do end up in a collision, then it’s important to know how your insurance works to help alleviate the cost of the damage. After a collision, and after you’ve made sure that anyone involved is unharmed, you should make a call to your insurance agent. During the call, you’ll be providing details of the incident to your agent, and in some cases, the insurance company may require you to make a sworn statement detailing the accident. Be certain to note any personal harm and take photos of the damage. The DMV has more detail on how to file a car insurance claim.
After you’ve contacted your insurance agent, your case will be processed. The case will be assigned to someone at the insurance company who will work directly on your claim. At some point, you’ll need to meet with your claims professional in order to discuss the situation and whether or not it’s covered. The claims professional will evaluate the case, which may involve inspecting your vehicle and examining the evidence. The case will be resolved, with payments being issued, and finally, the case being closed. During this process, you should keep the receipts for any repair expenses, and seek out medical treatment even if you don’t think your injuries are severe.
How Does an Insurance Deductible Work?
Before you decide on an insurance provider, it’s important to know what a deductible is, and how it works. In short, a deductible is an amount that you have to pay directly before the insurance company will pay any expenses on a claim. This means that if you have a $1,000 deductible and you get into a collision that will cost you $5,000 in repairs, you’ll pay $1,000 towards the repairs, and your insurance will cover the remaining $4,000. Naturally, this means that you’ll usually want your deductible to be as low as possible.
The size of your deductible will depend chiefly on who you’re using as an insurance provider, and how much you’re paying. If you pay a higher premium, then your deductible will generally be lower. On the other hand, if your insurance is on the cheaper end, then your deductible will usually be higher. As stated by the DMV on their page about deductibles, deductibles do not apply to liability auto insurance coverage.