When you own a car, it’s your responsibility to make sure you can drive safely and legally. Unless of course, you have someone else take the wheel for you! But owning a car comes with other responsibilities too.
You need to have car insurance. Whether you’re buying your first car or adding another to your fleet, it’s important to know what kind of coverage you need and how much that will cost.
After all, car insurance is an ongoing expense. It doesn’t just happen once. But there are several factors that come into play when choosing the right policy for your needs:
What’s the difference between collision and comprehensive?
Collision coverage is designed to help you repair or replace your car if you have a collision. Collision car insurance is meant to protect you if you are at fault in a car accident, meaning you caused the crash.
While collision insurance is optional in some states, it’s required in others. Comprehensive car insurance protects you if your car is stolen, vandalized, floods, or is hit by falling objects like trees or birds.
This coverage is meant to protect you if you’re not at fault in an accident. Comprehensive car insurance is optional in most states but is highly recommended.
How much is car insurance?
What you pay for car insurance depends on a number of factors, including your age, where you live, what kind of car you drive, and whether you have any driving records or other factors that would increase your premium. Factors that could increase your premium include:
- Driving record: If you have any speeding tickets or accidents on your record, this would increase your premium.
- Age: Car insurance companies charge younger people more because they are more likely to be involved in accidents.
- Gender: Women generally pay less for car insurance because they are less likely to get into accidents.
- The type of car you drive: Certain cars cost more to repair or replace.
- Your credit: If you have bad credit, it will increase your premium.
Estimate how much car insurance you need
Start by calculating the value of your car. If you have collision coverage, this will be your estimated payout amount in the event of an accident. If you have comprehensive coverage, this will be how much it would cost to repair or replace your Mitsubishi Pajero Sport.
Next, calculate your projected monthly expenses. Include your car payment, insurance, fuel, maintenance, and any parking fees. Now, add the two figures together.
If the total is more than your car’s value, you’ll need to increase your coverage. If the total is less than the car’s value, you can scale back how much coverage you have.
Types of Car Insurance Coverage
- Bodily injury coverage: This is the coverage for the other people involved in the accident. Coverage levels range from $50,000 to $100,000 per person and $100,000 to $300,000 per accident.
- Property damage coverage: This is the amount of coverage you have to pay for damage to other people’s property.
- Medical coverage: This is the coverage for your medical bills in the event of an accident.
- Uninsured motorist coverage: This is coverage against other drivers who don’t have car insurance.
- Comprehensive coverage: This is coverage for loss or damage to your car due to natural disasters such as fire, vandalism, theft, or falling objects.
- Rental reimbursement coverage: This is coverage for the rental car if your car is being repaired.
Your Own Fault Coverage
If you are at fault in an accident, this coverage will pay for your damages. Medical costs: This pays for any medical expenses due to injuries sustained in the accident.
Uninsured motorist benefits: This coverage pays for your damages if the driver who hit you doesn’t have insurance. This is separate from the uninsured motorist coverage already discussed.
Other types of coverage: Collision coverage, comprehensive coverage, and roadside assistance are available as well.
When buying a new car, don’t forget the insurance!
If you are financing a new car, you need to inform your insurance company that you now have a new vehicle. The insurance will take into consideration the loan amount and bring your premium back down.
If you’re leasing a new car, contact your leasing company and let them know. They will likely notify your insurance company. If you’re financing a used car, you need to inform your insurance company as well.
Since they don’t know the exact value of the car, they may try to underpay your claim. Let them know that you’re driving a “blue book” value car so they can adjust your premium appropriately.
Car insurance is important for many reasons. It’s required by law in most states and can help cover the cost to repair or replace your vehicle in the event of an accident. Most car insurance companies will give you a free quote online.
Simply fill out a form that asks for information like your age, where you live, the type of car you drive, and your driving record. With all this information, you can find the right policy for you. Now, you can go out and enjoy the freedom that comes with owning a car.