Car Insurance For Students
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What is Auto Insurance?

Understanding your auto insurance and what it covers

Basic auto insurance is mandatory in a lot of states and gives you some financial safeguarding in case of an accident. Is it adequate? Are there options? Learn about how your auto insurance works and what kinds of coverage are available.

Understanding automobile insurance

Auto insurance is an agreement between you and your insurance company that safeguards you against financial losses in case of an accident or vehicle theft. For you paying an insurance premium, your insurance company has agreed to pay out your losses as detailed in the policy.

Auto insurance offers coverage for:

  • Property – like damages to or theft of the vehicle
  • Liability – your legal obligation to other individuals for bodily injuries and/or property damages
  • Medical – the expense for the treatment of injuries, recovery and in many cases lost wages and funeral costs

Personal vehicle insurance is mandatory in a lot of U.S. states, and laws differ. Vehicle insurance coverage is priced on and individual basis (a la carte) so you can customize your coverage amounts to suit your exact requirements and your budget.

Policies are usually issued for 6 months or 1-year periods and are renewable. Your insurance company will send out a notice when the time comes to renew your policy and pay the premium.

Who is covered by auto insurance—and what are the circumstances?

Your vehicle policy covers you and any family members you have on it, whether driving your vehicle or somebody else’s (with their consent). The policy also offers coverage if somebody that is not on your policy is driving the vehicle with your permission.

Your personal auto policy will only cover personal driving, if you are going to work, going to the store or going on a trip. It won’t offer coverage if you use the vehicle for commercial use—for instance if you deliver sandwiches.

Personal auto insurance won’t offer coverage when you use the vehicle to provide rides to individuals through ride-sharing services like Uber or Lyft. Many automobile insurers, nevertheless, are now providing supplemental insurance services (at added costs) that extends coverage for those offering ride-sharing services.

Is it mandatory to have auto insurance coverage?

The requirements for auto insurance differ by state. If you are financing a vehicle, your lender can also have their own requirements. Just about every state requires vehicle owners to have:

  • Bodily injury liability – that will cover costs related to injuries or death that you or a different driver causes when driving your vehicle.
  • Property damage liability – that compensates others for damages that you or another driver driving your vehicle has caused to another vehicle or other property, like fences, buildings or a light pole.

Additionally, a lot of states require that you have:

  • Medical payments or personal injury protection or PIP, that provides compensation for medical costs for injuries to you and/or your passengers. It also covers any lost wages and other associated costs.
  • Uninsured motorist coverage compensates you when an accident is caused by a driver that doesn’t have auto insurance—or in cases of a hit and run. You may also buy underinsured motorist coverage, that covers costs when another driver does not ha adequate coverage to pay the costs of a serious accident.

Also, if PIP or uninsured motorist coverage is an option in your state, think about including them in your policy for more financial safeguarding.

Are there other kinds of auto insurance coverage that are typical?

While a lot of basic, mandatory, legal auto insurance covers the damage that your vehicle may have caused, it doesn’t cover damages to your own vehicle. For coverage on your own vehicle, think about these available coverages:

  • Collision Coverage – compensates you for damage to your vehicle that happens because of a collision with another automobile or other object—like a tree or utility pole—when it’s your fault. Whereas collision coverage won’t compensate you for mechanical failure or normal wear and tear on your vehicle, it will, however, cover damages from potholes or if you roll your vehicle.
  • Comprehensive Coverage – offers coverage against theft and/ or damages caused by an occurrence that is not a collision, like fires, floods, maliciousness, hail, falling rocks or trees, and other dangers— or possibly hit by a meteor!
  • Glass Coverage – offers coverage for windshield damages, which is not uncommon. Many auto policies have no-deductible glass coverage, that also includes your side windows, the rear window, and sunroofs. Or you may purchase supplementary glass coverage.

What is gap insurance, and is it necessary?

Collision and comprehensive coverage just cover the market value of the vehicle, not what you paid for it—and newer cars quickly depreciate. If your vehicle gets totaled or someone steals it, there might be a “gap” between what is owed on the vehicle and the insurance coverage. In order to cover this, you might want to look into buying gap insurance to cover the difference. Note, for leased vehicles, gap coverage typically gets rolled into the lease payments.

Auto Insurance Quotes

From offering liability protection to you and your family to helping you get reimbursed for personal property damage, auto insurance provides many types of coverage. Learn more about Auto Insurance Coverage or get a free auto insurance quote from Klimes Insurance today.

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