Every driver in the United States needs car insurance, but finding the right insurance isn’t easy. The first thing you need to understand is why you need car insurance so that you can compare your options to find the best coverage provider. If you get lost comparing different plans, you can always return to online reviews and comparisons to get a clearer idea.
Insurance is a simple idea, and the government requires it for driver because they want to ensure that if a driver causes an accident, he or she has the coverage necessary to pay for the damage done to other drivers’ property. By paying a monthly insurance premium to a provider, the driver is covered in many unfortunate accidents and events. After an accident or theft, the insurance company typically pays for repairs or a replacement. Plans usually include a deductable, which is an amount that they deduct from the total cost of the car or damage, paying only the difference. Insurance companies are diligent about investigating claims to ensure compliance with their requirements. Typically, the lower the total coverage value and the higher the deductable, the lower the monthly premium is.
So drivers need car insurance, not just to comply with legal requirements but to protect themselves. Instead of facing a situation where they have to come up with several thousand dollars or more to repair a damaged vehicle or replace one that has been stolen in order to continue their life, they can pay a more manageable monthly amount to spread that cost out if something unlucky does happen.
Car insurance is complicated because of the range of problems they might cover and the complex scheme of points they use to determine how much to charge each month. For example, most states track driver performance using a points system. Any moving violation results in a certain number of points being recorded on your drivers’ license, where they typically stay for 18 months. Insurance companies access this information and use it in the same way they use any proof recklessness such as accidents. If you have it, they charge higher premiums. On the other hand, if a driver has a history of being accident free, a young driver has good grades, or a person drives a particularly safe, low theft-risk vehicle, he or she may enjoy a reduced premium.
Car insurance comes in three basic varieties: liability, collision and comprehensive. Most states only require liability, which covers damage the policy holder does while driving. Liability will pay to repair someone else’s car if you cause an accident. Collision coverage pays for damage done to your car even if you cause the accident. And comprehensive plans cover everything else, including flooding or vandalism. Liability coverage is the least expensive, while adding comprehensive coverage is much more costly.
Choosing what type of insurance works for you, finding the best provider and plan to give you the lowest rates and ensuring you don’t miss something in the fine print of the plan can be very difficult and confusing. But it is worth taking the time to read up on your options and consult detailed primers on all the different aspects of car insurance to protect yourself with the right insurance product.
License: Image author owned
Jeffrey Davidson is a writer with Reply!. He has more than 25 years of marketing research, public relations consulting and freelance writing experience and work in all areas of insurance. For more help, see his article on car insurance prices.