Even if you don’t own your car, knowing the basics of car insurance and how it works is important. You may have heard things about motor insurance types to know but may haven’t cleared it out. In this post, you’ll be getting all the details you need.
Here are the five main types of motor insurance that every driver needs to know about. When you buy one of these types of insurance, you know you will be properly covered. Stick with me to the end of this article.
Third-Party Property Damage Coverage
This type covers any damage to a third party’s property in an accident caused by you or your car. Another instance is if you hit another driver’s vehicle or cause debris from a crash to get into their car. Here, their third-party property damage coverage would come into play.
Most drivers opt for 100/300/50 liability limits and $1,000 in coverage on property damage per accident. You can raise these limits if you have substantial assets that could be at risk if you are sued.
It is important to note that state laws vary greatly regarding how much insurance is required for each category. To find out what your state requires, contact your local DMV office. They will also provide details about other insurance categories you should consider purchasing, such as uninsured motorist protection, etc.
Physical Damage Coverage
This covers the damages you cause to another person’s vehicle in an accident. If your car sustains damages in a collision, it will cost money to repair or replace. By buying physical damage coverage, you’ll get protection from paying these expenses out of pocket by buying physical damage coverage.
It may seem expensive, but remember: an accident could wipe out years of savings! (It happens more often than you think.) Plus, check with your insurance agent to see if there are discounts available based on your good driving history. You may be able to save hundreds of dollars per year simply by avoiding accidents.
Your agent can help determine whether you qualify for a discount. Many safety features are offered as standard equipment today that were once optional add-ons. Make sure your policy covers them all.
For example, anti-lock brakes were once a $200 option, but now they come standard on many cars. Make sure your policy recognizes them. Even if you don’t have anti-lock brakes, get quotes from multiple companies to determine how much they’ll deduct.
This type of insurance protects you if your car collides with another vehicle or object, such as a tree. The policy will cover damages to your vehicle, passenger injuries, and related property damage. It can also cover damage if another driver hits you and their vehicle is considered more at fault than yours.
Collision covers up to $1,000 for other people’s medical bills in an accident with an uninsured driver. Collision pays for damages above and beyond what comprehensive covers if you have comprehensive coverage. In some states, it may be illegal not to have collision on your car.
In others, it’s optional but recommended. You’ll pay higher premiums for collision coverage than you would for liability. Collision insurance doesn’t protect against theft, vandalism, fire, flood, or natural disasters like earthquakes. That kind of protection is called comprehensive coverage but don’t get both collision and comprehensive — it isn’t necessary.
This insurance will pay for damages that occur from any unforeseen event and generally cover your car and any passengers inside. Comprehensive coverage also covers damage caused by natural disasters, like fires, floods, windstorms, falling objects, and animals. Comprehensive coverage is a good idea if you’re concerned about weather events and other potentially costly risks.
It costs more than collision coverage but may be worth it if you have a newer vehicle with expensive features. It may not be worth it if your car is older and depreciates in value. You should check with your insurer to see what they consider a newer vehicle.
Most insurers offer discounts on comprehensive coverage if you install anti-theft devices such as alarms and tracking systems. These devices deter thieves who are looking for cars that are easier to steal. Though comprehensive coverage doesn’t cover theft, these devices could lower your premium because they make your car less attractive to thieves.
Keep in mind that most policies require you to pay a deductible before your insurer pays out claims. A deductible is how much money you must spend out of pocket before your insurer starts paying out claims.
Garage Keeper’s Legal Liability Coverage
It is essential that you have garage keeper’s legal liability coverage. This protects you if someone is injured at your residence and decides to sue you. It also covers any damage they do to your vehicle or other possessions while they are on your property.
Garage Keeper’s Liability usually comes standard with any policy and only costs a few dollars extra per month. Talk with an agent today about including it in your policy.
Lastly, you may want to consider the following packages:
- No-Fault Coverage: No-fault insurance policies pay for repairs, replacement, or medical expenses if you get into an accident, regardless of whose fault. In some states, no-fault insurance is required by law.
If you live in one of these states, be sure to purchase a no-fault policy. If not, talk with an agent about adding it to your existing policy.
- Uninsured/Underinsured Motorist Coverage: This will protect you if you get into in an accident another driver causes without enough insurance for your damages. You can purchase this type of coverage separately from basic car insurance.
- Collision Damage Waiver (CDW): Collision Damage Waiver (CDW) is often included as part of a rental car agreement, but it may not always be offered. CDW means you won’t be responsible for paying out of pocket for minor scratches and dents to your rental car. Ask about CDW when renting a car to know what to expect if something happens during your trip.
These are the types of motor insurance to know for every qualified driver.