The Major types of Car Insurance Explained || Why did we need auto car insurance ? || Car insurance types ||

 Why did we need auto car insurance?

Auto car insurance is the only thing standing between many drivers and financial ruins. The average car accident costs $7500 in property damage. If someone is injured in accident, that amount jumps to more than $61000. And if someone is killed in car accident, you are looking at more than $1.1 million. It takes few seconds to change your life, and if you're not adequately insured, you could spend years paying damages of life. Car insurance is a relatively inexpensive way to guard against financial ruins due to car accident.

What are the main components of an car insurance policy?
Coverage-varies by state, but here are the 6 main components that go into an car insurance policy

1. Liability coverages

This includes body injury liability and properties damage liabilitis. Bodily injury can help cover the costs of injuries to another person if a driver causes an accident . Property-damage can help pay for damage a driver causes to another person's property. Each state requires some level of liability coverage__

2. Uninsured and underinsured motorist

This covers the policy-holder, their medical health bills, and repair to the vehicle (in some conditions) if the policy-holder is hit by a driver who carries too little insurance or none at all. Some conditions require this coverage, while others don't.

3. Comprehensive Insurance

Comprehensive coverages can help repair or replace a vehicle if it's damaged by things like vandalism, theft, hail, or by fire 🔥 . A person may need comprehensive coverage if they're still making payments on their car or leasing other vehicle.

4. Car Collision Insurance

Car collision insurance can help in repair or replace a policy-holder's vehicle if they are hit by another car or an object like a fence or tree . Again, it may be required if there's still a lender or leaseholder on the title.

5. Medical payment Insurance

As the name implies, medical payment Insurance may help pay the medical costs associated with injuries of insurer resulting from  car accident. Medical insurance coverage is required as part of an auto insurance policy in some conditions.

6. Personal injury protection insurance (PIP insurance)

PIP insurance takes medical payments one step further by covering other costs associated with auto injuries, like loss of income, house cleaning, or childcare expenses. In some conditions require PIP coverage.

What are typical coverage amounts?

There is no typical coverage amount as each state sets its own minimum standards. And each state has the right to require additional coverage. The state where the policyholder lives makes all the difference.

For example, the state of Illinois requires a minimum of $25000 coverage for bodily injury, with $50000 per accident. That state also requires drivers to carry $10000 in property damage insurance.

On the other hand, Maine requires drivers to carry $50000 insurance for body injuries, and $100000 per accident. They must also have $25000 in property damage insurance.

Rather than focus on typical coverage amounts, a driver should consider the most comprehensive insurance that they can afford. According to an estimate from the Insurance Research Council, about 1 of every eight drivers on U.S.A roads has no auto car insurance. That means if one of those millions of drivers hits someone, there will be no auto insurance on their side to cover the other driver's losses.

Getting car insurance quotes from several auto car insurance companies may not be anyone's idea of a fun way to spend time. Still, prices vary wildly, depending on age, driving history, and credit score . Shopping around can save money.

Optional insurance options within most policies
As we've mentioned, nearly every state requires drivers to carry, at minimum, liability insurance. And comprehensive coverage is a good bet to protect a vehicle. Beyond that, optional add-ons could also save drivers financially in the event of an accident. These include:

Medical payment Insurance: This insurance is not available in every state of USA but here's what this coverage can pay for:

Health insurance deductibles and copays for anyone in the Auto vehicle who is hurt
Doctor or hospital visits
X-rays, surgery, and other medical needs
The costs of ambulance services, including EMT fees
Professional nursing services as needed
Personal injury protection: PIP insurance is only available in states that don't offer medical payment coverage in their auto insurance policies. While it's required in some states, others make it optional. PIP may help pay for medical expenses if a driver or their passengers are hurt in an accident. It also covers things like lost wages and childcare if a person can't work following an injury.

Gap insurance: This covers the difference between what a car is worth and how much the driver still owes. Let's say someone borrows $30,000 to buy a vehicle. A week later, they're in an accident, and the car is totaled. The value of the car now that they've driven off the lot (and it's no longer new) is $25,000. That means the most an insurance company will pay the driver for the totaled vehicle is $25,000. Gap insurance pays the difference. The policyholder would get $25,000 from their auto insurance company and $5,000 from the company providing gap insurance. And they'd have enough to pay the $30,000 loan off in full.

Towing and labor coverage: If a person has a comprehensive auto insurance policy, they likely already have this coverage. If not, they can add it to their policy. As the name implies, towing and labor coverage reimburses the policyholder for the cost of towing the vehicle and having it repaired.

Rental reimbursement: This
Insurance helps pay for a rental car if a person can't drive their car following an accident.

Classic car insurance:  This CCA insurance will help people who collect or restore classic cars protect their investment. Many classic cars are worth far more than their Kelley Blue Book value due to customization and upgrades. Classic auto insurance makes it possible to insure a vehicle for what it's really worth.