How Car Insurance Protects You
Car insurance is designed to make sure everyone is financially responsible for what happens when they are behind the wheel. You can be held liable for any injuries or damages that happen when youre driving and have an accident, and mandatory coverage was created to make sure everyone can pay for those damages.
Rather than paying for these costs out of pocket, your insurance company protects you by kicking in to pay any bills youre responsible for in an accident.
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Important Additional Car Insurance Coverage
Most car insurance companies offer additional coverage that you can add to your policy, too. For example, gap insurance provides coverage for people who have auto loans. If your car is totaled in an accident or stolen, most car insurance policies will pay you the actual cash value of the car, which could be less than what you still owe on the loan. Gap insurance pays for the difference between the actual cash value of the car and what you still owe on the loan.
Roadside assistance and rental car coverage are also important coverage components to consider adding to your car insurance policy. This additional coverage can pay for your car to be towed, cover other roadside emergencies, or pay for a rental car while yours is being repaired.
Ignore Temporary Signs At Your Peril
And do keep a look out for speed limit changes on overhead signs on the motorway. A new law was introduced in June 2019 with an automatic fine of £100 and three penalty points for anyone failing to do so.
In fact research found that around a quarter of drivers deliberately or accidentally drove down the closed lane of a motorway. If youre in any doubt as to the consequences of this type videos of motorway accidents caused by drivers ignoring temporary speed limits into your search engine. Youll see why many campaigners are hoping to lower the speed limit. Now for the good news Happily, compared to our neighbours, Great Britain is relatively safe with less than, on average, 30 deaths per million of the population. In France the figure climbs just shy of 50. But 30 is still 30 too many.
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What Happens With The Expiry Of Car Insurance
As we have said already, the thing that happens first, in this case, is the complete nullification of your agreement with the insurer.
This means that you have to face the following financial and legal consequences when you do not renew your policy even within the new vehicle insurance grace period:
- zero protection or coverage
- re-inspection
- zero third-party liability
If your auto insurance policy lapses it implies that you lose your right to make a claim in case something wrong happens to your car. In such cases, your insurer would not have any obligation to cover the losses that you may suffer.
You may have not raised any claim within a year. However, if you have not renewed your car insurance policy you lose that benefit. The time that you have in this case is 90 days from the expiry of the policy. If you do not renew your policy within the policy period you could get imprisoned as well. At the very least you would have to deal with hefty fines and plenty of challans. It is illegal just as driving without a proper driving license. If you did not renew your policy within the right time the next time you want to do so the car insurer will inspect your car again.
If you do not have car insurance you would have to face all the legal liabilities in case you injured another person and/or their property in an accident all by yourself.
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What Types Of Car Insurance Coverage Are Available
When it comes to car insurance, the three main types of policies are liability, collision, and comprehensive. Mandatory liability coverage pays for damage to another driver’s vehicle. Not all states require collision and comprehensive, but even if you own your vehicle outright, you should consider adding these coverages.
Collision coverage pays for damage done to your vehicle in an accident, regardless of fault. Comprehensive coverage pays for damage from a natural disaster or vandalism. Other types of coverage include:
The benefits of car insurance far outweigh the risks as you could end up paying thousands of dollars out-of-pocket for an accident you cause. Make sure to examine your policy closely to know exactly what type of coverage you have, and consider adding other policies if needed. It’s usually better to have more coverage than not enough.
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Reasons Everyone Should Get Insurance
As we said at the start, most people think insurance is an unnecessary expense. The reason is that we feel confident about our future and our ability to tackle unseen circumstances. But there is a huge difference between our perceived ability and reality. For instance, a few years of savings can vanish in case of a medical emergency. Thats just one example.
Here are 3 reasons why getting insurance is important
Why Is It Important To Renew Your Policy During The Grace Period
In India, the car insurance grace period normally ranges from 30 to 90 days. However, this depends on which company you have bought the policy from. The grace period is provided for the policyholders so that they can renew their policies at the quickest. This also allows them to drive without flouting the laws of India and also retain the benefits that their policy provides. The major benefits of the grace period provided by insurers are the ability to retain the no-claim bonus, no vehicle inspection, and lower premium costs.
When you renew your policy during the grace period after insurance expires you need to ensure that you do not lose out on the no-claim bonus that you have accumulated in the previous coverage period. Usually, car insurers inspect a car if the policy is being renewed after it has lapsed. However, if you renewed within the grace period the insurer might waive off that inspection. If you renew the policy within the grace period you also do not have to pay higher premium to do so. You can get the chance to continue within the existing cost structure of the policy.
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Cost Saving In The Future
In the event that you are involved in a collision, car insurance will help you cover cost damages. This will help you prevent unexpected cost accumulation since the car may need several thousand dollars to be repaired. Car insurance, in this case will help you cover for any liabilities, pay accident benefits, and most collision costs.
Liability Is A Big Issue
Rental car liability insurance is recommended for all car renters for the simple fact that liability is a big issue. What is liability? It is a drivers legal obligations following an accident or any other incident the damages the car in question. In the case of rental cars, there are numerous types of liability coverage.
Suffice it to say that it is unwise to drive a rental car without some sort of liability insurance policy. Even supplemental credit card rental car insurance is better than nothing. Driving a rental without adequate insurance coverage exposes the driver to potentially significant financial loss in the event of an accident.
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Types Of Important Car Insurance Coverage
What is the main reason why car insurance is mandatory? Liability. For example, if you are injuring another person, you must pay for the damages you caused them. Its the reason why around 50 states require people to carry bodily injury and property damage. Liability insurance coverage will provide you with financial help for victims in the accident you caused. You may only be required to carry your countrys coverage, but you will also need to carry coverage for damages to your car.
So, experts pointed it out really clear: collision will pay for damages to your car in a collision. Full coverage will pay for your cars damage thats not accident related. For example, it may cover vandalism, animal contact, theft, etc. The best car insurance will cover repairs and replacements, replenishment for damages to the other party from the accident you caused. You must report the claim to your insurance company, and they should be managing the process and help you with all kinds of questions you might have. Thus, you must shop around and find the best car insurance quotes.
Driving Records And Insurance Rates
The insurance deductible is inversely proportional to the premium amount. If the deductible goes up, the premium goes down and vice versa. This relationship reflects whether you prefer to pay more or less from your own pocket before stretching out your hand to the insurer. Whichever option you choose, make sure you can afford it. Some people are better off paying a higher monthly premium in exchange for a lower deductible to avoid any large payments after an accident.
When comparing car insurance options be sure to ask about safe driver or good student discounts that might be useful for lowering your premiums.
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Insurance Is The Right Thing To Do
A sobering example of insurance in action is the West Fertilizer Co. explosion in Texas this spring. The explosion did $100 million in damage to the community, including schools and hospitals. The fertilizer company had only $1 million in general liability coverage.
Now the city is suing West Fertilizer and likely will win all of the companys remaining property and assets that were not damaged by the disaster. This is because the fertilizer company did not have enough insurance. Whats more is the city also is suing the suppliers to the fertilizer plant, claiming they knew they were supplying inherently dangerous materials. In the case of the West, Texas, plant explosion, insurance could have helped a community to recover after a crisis.
Insurance is something many business owners don’t want to think about. But whether they think about insurance, with hope it’s there, allowing for transfer of risk and providing a safety net for new opportunities.
Reasons Why Car Insurance Is Important
No one likes paying for car insurance. Maybe youve been driving for decades and never needed it, so why bother? Like many things in life, its better to have it and not need it, then need it and not have it. People have always known this about car insurance. In the UK, a company whose name is lost to time reportedly issued the first car insurance policy way back in 1895. No matter what country you live in, its an important policy to have. Why? Here are ten reasons:
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Damage Or Loss To Insured Vehicle
In case your vehicle is damaged due to an accident, fire, or self ignition, you are protected. Furthermore, if the car suffers losses due to burglary or theft, strikes, riots, or terrorism, your insurance policy covers these. Another benefit of car insurance is that it covers loss or damage while in transit by rail, inland waterways, air, road, or lift.
Insurance Keeps Commerce Moving
In the days after the 9/11 attacks, there were many worries about insurance coverage. Acts of war are not covered by insurance. Was terrorism an act of war? The big question was, How would the 9/11 attacks be classified? Fortunately, the insurance industry decided the attacks were not an act of war.
However, after 9/11, some insurers began excluding terrorism. But the federal government stepped in and required coverage in the name of keeping commerce moving. In this case, insurance likely prevented many businesses from avoiding terrorist-targeted operations, such as refineries and chemical haulers.
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Higher Deductibles Can Lower Your Premium
Insurance prices are based on how much money the insurance company believes it could have to pay. If you agree to pay for a larger portion of your own damages by raising your deductibles, your car insurance company automatically knows they won’t have to pay as much for your claims.
Because of this, they will usually give you a lower premium. If you decide to raise your deductibles to save money, be sure you can afford to pay the deductible if you have to make a claim.
To Get Your Car Fixed No Matter Who Caused The Accident
Every driver needs liability insurance, but only some need collision and comprehensive insurance.
- Collision insurance helps to cover the cost of repairing/replacing your car if you cause an accident or if the other drivers insurance doesnt cover the cost of your repairs .
- Comprehensive insurance covers damage to your car as a result of an incident such as vandalism, theft, floods, falling trees, rogue deer, alien invasion, etc.
Now, do you *need* collision and comprehensive insurance yourself?
It all depends on your response to a simple question: if your car were seriously damaged tomorrow, could you pay out-of-pocket for repairs or even a replacement?
If not, paying for collision and comprehensive insurance upfront can bring peace of mind and prevent a big financial burden. Thats especially true if you depend on your car for your personal health or income.
If your car isnt worth that much and you have a few grand to spare for potential repairs , you can safely pass on collision and comprehensive coverage.
Finally, if you couldnt pay out-of-pocket to repair/replace your car, but you could live without it for a while, you might also be OK without collision and comprehensive. Theyre not cheap, after all, and the pair can easily add ~$500+ to a six-month premium.
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Car Insurance Simplifies Things
Insurance can be frustrating depending on where youre from and how many policies you have, but following an accident, having insurance actually simplifies the process. Without insurance, youd have to deal directly with the other driver or property owners. When youre insured with a good company, they deal with pretty much everything.
Car Insurance Lets Other People Drive Your Car
Odds are, you wont be the only one using your car. This is especially true if you have children who are driving or will soon be driving. If youre related to the person or you live together, most car insurance policies let you add other drivers. What if a friend needs to borrow your car? Car insurance usually applies to the car thats covered, so the policy covers whoever is driving it, including a friend. If your friend gets into an accident with your car but its not their fault, the at-fault drivers insurance is responsible for costs.
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Is Car Insurance Required
Almost every state requires drivers to carry car insurance and carry proof in the vehicle. The Hartford states that New Hampshire drivers don’t need to buy car insurance but must show proof that they can pay for an accident if it’s their fault. According to AAA, each state also sets minimum auto liability coverage limits that drivers must purchase.
Having third-party or liability insurance is a law, and you must buy a policy whether you purchase a new or used vehicle. You can also purchase a comprehensive policy. Third-party insurance covers you against legal and financial obligations toward a third party. The comprehensive policy covers you against damage from an accident, fire, theft, or natural disaster.
Types Of Auto Insurance
Car insurance can pay to repair your vehicle after an accident, depending on what coverage you select. A vehicle is often a major expense, and you want to protect it. Comprehensive and collision insurance each offers coverage for physical damage. This comes with a lot of rules regarding what is covered and what is not.
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Insurance Brings Peace Of Mind
The premium you pay to the insurance company is the price that guarantees that the insurance company will cover the damage in case of an unforeseen event. And, that guarantee that your risk is covered brings peace of mind.
For example, lets suppose you die an untimely death at a time when you still have several milestones to achieve like childrens education, their marriage, a retirement corpus for your spouse etc. Also there is a debt as a housing loan. Your untimely demise can put your family in a hand to mouth situation. But, if you would have bought term insurance considering all these factors, your family would be able to sail through during the hard times.
To Protect Your Assets
Lets say you cause a $50,000 accident but only have $5,000 in your bank account. The other drivers lawyers can legally seize additional assets in your name to cover what you owe.
That can include your investments, your car, and even your house.
Yep you can lose your house in a fender bender.
Remember, liability insurance doesnt protect you it protects your net worth. It creates a buffer zone between the victims entitled compensation and all of your stuff.
Thats why when you buy a home, you should increase your auto insurance liability limits. 50/100/50 is a much wider buffer zone to protect your home equity.
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What Is The Most Important Car Insurance Coverage
Erika Rasure, is the Founder of Crypto Goddess, the first learning community curated for women to learn how to invest their moneyand themselvesin crypto, blockchain, and the future of finance and digital assets. She is a financial therapist and is globally-recognized as a leading personal finance and cryptocurrency subject matter expert and educator.
While there are many types of insurance coverage available for auto insurance, you may wonder what is the most important? Arguably, the most important car insurance coverage is the kind you need at the time of loss, but we can never be certain what that coverage will be because each accident is different. What we do know is that some coverage is required by law, and other coverage is available to us depending on our personal circumstances.
Here are some things to consider when determining what coverage is required and where you can be more flexible.
