Types of Auto Insurance

Everyone needs auto insurance if they plan to drive. But, not all types of auto insurance are the same. It’s important to know the difference so that you can get the right coverage for you. Always be sure to check your state’s requirements so that you are always carrying the right insurance on your vehicle. Let’s look at what’s available.

Liability Coverage

This is the most common type of coverage and the one that is typically required in any state. Think of it as the bare minimum coverage that you need to have. Liability coverage is for both your protection and the protection of other drivers. Liability coverage helps to cover damages for injuries and property damages to others. These are injuries and damages that you are legally responsible for due to an accident. This coverage also includes medical expenses, lost wages, and expenses due to other consequences resulting from the accident.

Collision Coverage

Collision coverage may cover damage to your car after you have an accident involving another vehicle. This may help to repair or replace a vehicle that is covered under your plan. It doesn’t matter who is at fault for the accident. Collision insurance also covers damage to your car that is the result of a run-in with a tree or building. Many collision plans also offer a replacement provision as part. If the insurance company declares your car “totaled” due to an accident, you may be able to get a replacement vehicle of the same value or get money to make a down payment on another vehicle.

Comprehensive Auto Insurance Coverage

This type of insurance provides an extra level of coverage when you’re in an accident involving another vehicle. It may also pay for damage to your car that is unrelated to an accident. This can include vandalism, accidents involving animals, and some weather events. Comprehensive coverage usually has a deductible, meaning you pay a certain amount of money out-of-pocket before your insurance company covers the rest of the claim.

Uninsured Motorist Insurance

Although it is usually required that all drivers must have some type of auto insurance, there are plenty of drivers who ignore this rule. This is a dangerous scenario for them and for all drivers they come in contact with on the road. If you invest in uninsured motorist insurance, you can protect yourself against these drivers as well as hit-and-run accidents.

Underinsured Motorist Insurance

Some people take out an auto insurance policy with minimum liability coverage in order to save money, but this may not be enough coverage when they really need to use the plan. If you have underinsured motorist insurance, you can protect yourself in case you get into an accident with a driver who doesn’t have enough insurance to cover the costs.

Auto Insurance Gap Coverage

These days car values decline rapidly. If you have an accident, any money you receive from a settlement may not be enough to cover the loss of any outstanding loan payments. Gap insurance can help drivers cover any outstanding money owed on a car loan due to theft or an accident that leaves the car a total loss.

Factors That Are Considered When Deciding Auto Insurance Rates

Once you decide the types of auto insurance you want to include on your plan, it’s time to get a quote. While a friend or family member may tell you about a great rate they got, yours may not be the same because many factors that go into deciding auto insurance rates. These are some of the things that companies consider when determining your rate:

Age-

If you have new or young drivers on your plan be prepared to pay more. These drivers are considered a huge liability and are the reason why companies typically charge more to insure them.

Driving History–

Anyone with a history of driving violations can expect to pay more for any of the types of auto insurance listed above. Many companies look at a driver’s previous driving record as an indicator of their future driving record.

Location-

Auto insurance rates differ state by state. Insurance costs tend to be higher in areas with more drivers, like big cities. Costs are also higher in areas with high-crime rates or that are prone to floods and natural disasters. Companies consider these factors as high-risk as well.

Mileage–

Depending on where you live, your mileage may also play a role in your auto insurance rate. If you tend to drive a lot, you may have higher rates versus someone who doesn’t put a lot of miles on their car. If you spend a lot of time on the road, companies may see this as you having a greater chance of getting into an accident or having a violation. While this may not be the case, it is a factor that many companies use when deciding what rates to charge.

History of Claims–

Insurance companies will look at the number of claims you’ve made and the number of claims you’ve had filed against you to determine your rate. If the number is what the company considers to be high, you can expect your rates to be higher than someone who has never filed a claim or had one filed against them.

Find out More About the Types of Auto Insurance from Complete Financial Group

If you’re looking to find a new auto insurance plan and would like more information about the different types of insurance out there, contact Complete Financial Group. We can explain the different types of coverage available so that you can decide what type of coverage is right for you. We can also give you a quote on the type of coverage you need and explain the factors we use to determine our rates.