If you are the owner of a vehicle, you may be legally required to be insured against certain risks. In the event of an accident, your insurance company bears the responsibility of compensating you or the victim. To identify the scope of your auto insurance policy and its limitations, you need to familiarize yourself with basic auto insurance terms.
Collision Insurance
With collision insurance, the provider will pay for repairs or replace your car if you are involved in an accident with an object like a fence or tree or collide with another vehicle. In case you are leasing your car, the lender will demand this coverage. Generally, collision insurance will pay for repairs or replace your car if you collide with, an object, or another car
Collision insurance does not apply to damage to another vehicle. This policy also does not cover damages that do not involve driving. For example, theft or hail are not included in this coverage. Also, this insurance will not cover medical bills.
Comprehensive Insurance
This policy covers damages to your vehicle from other causes, except for a collision. Therefore, this type of insurance will cover your car if it is damaged by harsh weather, ruined by a vandal, or crushed by an unprecedented event like a collapsing building.
Comprehensive is suitable if you want protection against damages that are beyond your control. This policy does not apply to medical expenses or damages resulting from collisions. This is the ideal coverage for a person who is buying a new car.
Deductibles
Auto insurance deductibles refer to the money you pay for an accident or claim. They are also called out-of-pocket expenses. Deductibles apply to auto insurance policies such as collision and comprehensive. It is crucial to inquire about an insurance policy's deductibles before making any payments.
For example, if you take a comprehensive policy with a deductible of $300 and get into an accident resulting in $2,000 damages, you and your insurance company will share the cost of damages. When you file a claim with the insurance company, you are supposed to pay the $300 deductible. The insurance company will pay the remaining $1,700 for your car repairs.
In Conclusion
Understanding auto insurance terms is crucial if you are to find the most appropriate insurance policy. The next step is finding a reliable and reputable insurance provider. Ensure you take quotes from different providers before settling on an insurance company.
Share20 July 2021
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