People are usually skeptical when buying car insurance because there are too many technical jargons to understand. Even after going through them all, most end up buying the wrong coverage that doesn’t come to their rescue in times of crisis.
Instead of understanding them all, you can consider knowing the five basic and most important things before applying for a coverage.
Premium and Deductible
These are the very basics that matter the most. Obviously, the premium is the sum you pay to the car insurance company to offer you their services and coverage. The entire amount will be split into monthly or quarterly so that it is easy to pay it. Paying upfront will get you good discounts, but you may have to negotiate it with the company. The deductible is the sum that you have to pay to repair your vehicle in case of an accident. If you can’t pay higher deductibles when an incident occurs, it is better to increase the premium than face unexpected expenses when you are out of cash.
Limits on Liability
Not all car insurances are the same because every company will have different limits on liability. Most companies have the policy of paying 25-50-25 which denotes that they will pay $25k for an injured person, $50,000 for the damaged vehicle and the rest $25k is for damages that occur to a property. Based on the type of vehicle you use and expenses it may incur in case of an accident, you can choose to increase your premium to increase the company’s liability.
Type of Insurance you choose
There are different types of insurances that you can go for. Liability insurance and collision coverage is the most popular of them all. Liability is helpful if you are still learning the nuances of driving. In case of damage to another vehicle, property or person, the company will pay them on your behalf. The laws will vary from one state to another. Collision coverage is helpful where the company will pay to help you repair your vehicle in case of an accident. The other variants include comprehensive coverage and UMPD.
Personal Injury Protection
While there are multiple types of injury coverage offered by the car insurance company, personal injury protection matters a lot. PIP makes it easy to cover medical costs for the driver as well as the other passengers in the car. It even covers a pedestrian if they accidentally get involved in the collision and get hurt so that you don’t have to pay anything out of your pocket.
Depreciation
Depreciation is an important aspect that companies don’t elaborate, but something you should know in depth. If you have been using your car for a long time, you may not be able to make huge claims as its value depreciates over time. In such scenarios, ensure that you either reduce your premium or consider replacing your old car with a new one so as to make proper claims from the car insurance company.
