Basics of vehicle insurance

Basics of Vehicle Insurance

Share on X Share on Facebook

What exactly is Vehicle insurance?

Vehicle insurance is a package designed to protect you in the event that due to an accident, you inflict injury on others, including property damage and bodily injury. Depending on what coverage and plan you have, it will compensate you for damage and injuries to your vehicle.

Auto insurance, in its simplest form, is a contract between you and your insurance company. You agree to make payment of a fixed price, called insurance premiums, in exchange for selected coverages.

The type of policy you have is detailed in the declaration page, also ensure to always read it and understand the exact coverage that you have. It's always smart to review your document thoroughly and make sure there are no overlapping coverages, e.g. rental coverage. Usually, this is covered in your credit card agreement, so you may be wasting money by getting it. You can always update your insurance or cancel it whenever you want.

What does vehicle insurance coverage include?

This is a frequently asked question by new customers. The answer is that it depends on the plan and the type of insurance you're buying.


There are four main categories of protection.

 - Liability insurance

This covers third party injuries, damage to your vehicle and also property damage. If you have a car that isn't worth much and you don't drive a lot, liability insurance may be suitable for you. It's more pocket friendly than full price, with prices in some states starting at $29 for good drivers.

- Collision insurance:

This will pay for your compensation and medical expenses. It's smart to purchase it if your car is new and cost $12,000 +.

- Comprehensive insurance

This type of insurance is the gold standard for insurance cover. This kind of policy is more expensive but has far-reaching protection. This coincides with the collision and will repair or replace your vehicle for accidents that cause damage or loss, not related to a motor vehicle accident. This implies that you will be protected if your car is stolen, and it can be replaced at its current market price. In addition, weather-related damage to your vehicle will also be insured. Typical examples are fires, floods, and animal accidents.

ALSO READ: Procedure for Auto insurance claim

- Insurance for Uninsured Motorists

More people without insurance are driving on the roads than ever before. Purchasing uninsured drivers insurance will protect you from these outlaw drivers. If you are involved in an accident with an individual without insurance, you will be insured according to the limits of your policy.

It is imperative to know that each state has different laws and mandatory insurance coverage. You should get familiar with the mandatory limits in your state and keep abreast of changing laws.

- Most Popular Car Insurance Covers

Each type of insurance you buy has a set of policy terms, limits, and multiple terms.

The insurance will pay, as the name implies, for bodily harm sustained from an accident that you turn out to be the culprit. A sound liability policy will also cover for legal fees, up to certain predetermined limits, should you be sued in court.

Liability will cover for damage you have caused to someone else's property, often their own vehicle, after an accident related to the fault occurs. Health insurance will generally cover you and your car passengers who are injured in an accident. Another benefit of good health coverage is that it will cover medical costs in the event you are hit by a car as a pedestrian.

Share on X Share on Facebook