As a car owner, you have many responsibilities, one of the most important being getting car insurance. Having the right policy will provide you with many benefits including covering the bills for repairs due to damages caused in an accident, as well as providing legal protection in case a lawsuit is brought against you as the result of an accident.
However, in order to reap all the benefits car insurance provides, it is imperative that you purchase the right policy for you. Since shopping for auto insurance can be a bit overwhelming, all you have to do is conduct thorough research on the various types of insurance policies and choose one that best suits your needs, and most importantly your budget.
To get you started, we have outlined five types of auto insurance that are commonly required.
Liability coverage
Liability coverage is mandatory in almost every country in the world. Its main purpose is to provide financial and legal protection against claims resulting from injuries and damages to people and property. That’s why it includes two types of coverage, bodily injury and property damage. Drivers are required to purchase at least the minimum amount of liability coverage set by state laws, which vary among countries and provinces.
For instance, in Ontario, Canada, the minimum amount of coverage drivers must carry is $200,000. However, this number can vary among provinces, so click here to consult with experienced insurance brokers and get the best policy rate for you.
Uninsured or underinsured motorist coverage
Another mandatory auto insurance you need to consider obtaining is uninsured or underinsured motorist coverage. This policy is designed to provide financial and legal protection to you and other passengers in your vehicle, in case you get in an accident with an at-fault driver who either doesn’t have liability coverage or doesn’t have enough to cover your injuries and damages.
Similar to liability insurance, the minimum coverage requirements can vary by country, so make sure you first check your country’s financial responsibility laws so you can obtain enough coverage. All in all, it is relatively low cost and can certainly come in handy in some cases.
Medical payments coverage
Although required in some countries and optional in others, medical payments coverage is another type of auto insurance you should consider obtaining. It is used to cover all medical and funeral expenses if you or any passengers in your vehicle sustain injuries in an accident or suffer fatal consequences.
The coverage can also be used to cover injuries if you are hit by a car as a pedestrian. Examples of covered costs include hospital visits, treatment, surgery, X-rays, and more.
It is important to note that this coverage may cover some of the same expenses as your health insurance, so make sure you don’t duplicate anything.
Collision coverage
A type of insurance that is optional in many parts of the world is collision coverage. Its main purpose is to cover the costs for any repairs or replacements of your vehicle if it is damaged after colliding with another car, tree, or guardrail. It is only required if you lease or finance your car.
The cost of collision coverage varies between countries and insurance companies and mainly depends on the deductible you choose. The general rule of thumb is the higher deductible you choose, the more money you will save on your premium. However, it is important to note that higher deductibles also mean you will pay more out of pocket after an accident.
Comprehensive coverage
Comprehensive coverage is another optional auto insurance you can greatly benefit from obtaining. It helps pay for damages or losses that resulted from something other than a collision such as theft, vandalism, fire, falling objects, earthquakes, and hail. It can also provide financial protection against damages from animals like birds or deer.
Like collision coverage, this coverage also has a deductible and the same rule applies as previously explained. Typically, insurance agents advise their clients to choose a deductible between $100 and $500 to cover the costs of damages before their insurer reimburses them for a covered claim.
Final thoughts
Obtaining car insurance is one of your main responsibilities as a driver. Purchasing the right policy will provide you with both financial and legal protection in case you are involved in an accident and suffer injuries or your vehicle sustains serious damages. If you aren’t sure which policy is right for you, refer to our post and read about the most commonly required types of auto insurance.
