Auto insurance is a huge business these days and there is a whole variety of terms used in this field. It would be great to grasp some definitions and facts related to auto insurance. Thus, next time when you are out searching for your next insurance provider or out on a hunt for a better deal, you will be in good stead with some prior deep understanding of the terms and facts that the agents generally use to confuse you.
California Auto Insurance:It is a legal agreement between you and an insurance provider. In the legal agreement, you agree to pay the insurance company a premium; in exchange, of which the company agrees to pay for the financial losses incurred by you during the tenure of the agreement for specified incidents.
Premium: The amount you must pay to the insurance company for getting their insurance policy.
Deductible: It is the amount you will have to pay initially for the damages, before your insurance company comes into the picture and pays for the remaining bill. If you have collision cover with an $800 deductible, then you ought to pay the first $800 of the repairs for the damage done to your car.
Liability Coverage: This coverage protects you financially for the damage done to some other person’s property or the body injuries sustained by them in an accident by your fault or by someone driving your car.
Bodily Injury Liability: This covers for the bodily injuries inflicted by you on the other persons involved in an accident by your fault.
Property Liability: This covers the damage done to the car and other property of another person involved in an accident by your fault.
Medical Coverage: It is one of the important coverage options yet the most neglected ones. You know how the medical bills can run into thousands these days, medical coverage pays for the cost of hospital treatment of all the injured persons in an accident done by your vehicle.
Personal Injury Protection: This cover pays the cost of medical treatment, loss of income as well as for the death benefits for you and the fellow passengers in your car, god forbid if an accident happens. It is also known as No-Fault cover, as it pays irrelative of the fact whether the accident was your fault.
Collision Coverage: As the name goes, this cover pays for the damage done to your automobile in an accident. It pays even if the accident happened because you losing concentration. This can apply even to rented or leased cars, check with your insurance company.
Comprehensive Coverage: It is the most expensive coverage option as it covers you for the damage from theft, vandalism, fire, hailstorm, glass breakage, collision with a tree, building or any other object.
Uninsured/Underinsured Motorists Coverage: This is actually a boon for you if a slack driver hits you and run away or if you and your fellow passengers get injured in an accident by the fault of an uninsured motorist. The Uninsured motorist cover pays for all the medical bills of the hospital.
Towing and Labor Coverage: If you are driving somewhere in a very good mood and suddenly your car breaks down, how petty you will feel if you just don’t have any assistance to fix that broken car. The towing and labor cover pays the cost of repairing your car. Some insurance companies now even provide roadside assistance in such emergencies, so that you do not frustrate or scuffle.
Low Mileage Credit: If you are not a frequent traveler then this one is for you. Low mileage credit helps you lower the cost of auto insurance policy or earn a credit, if your car runs lesser number of annual miles. Since, you drive less so there is lesser risk of you being involved in accident.
Now it is time for us to throw some light on the some of the lesser-known facts related to auto insurance. These facts have been chosen from our knowledge of auto insurance industry as well as from the report National Association of Insurance Commissioners (NAIC).
1. Buy a Safe Car: Well, obviously luxury, looks, style, handling, comfort and price are all very important factors when you are buying your new car but also keep in mind, after that you have this long running requirement of auto insurance. The cost of auto insurance can run into thousands. A safe car is one with good crash test ratings and extra safety features installed. This will significantly lower your car insurance premium.
2. Be a Smart Driver: Driving smartly doesn’t mean that you have to be a sluggishly slow driver. By smart we mean, you must follow the traffic rules, wear seat belt, don’t drive drunk and if you are a parent to an infant then use child seats in your car. Keeping a clean driving record will substantially deflate you premium.
3. Buy a Cover other than Liability coverage: According to a data from NAIC, about 77% of all insured drivers also procure comprehensive coverage and about 72% purchase collision coverage, in addition to their liability cover. This helps them pay for the medical bills, repair costs of their cars as well as lost wages and other unseen incidents.
4. Auto Insurance costs more in Urban Locales: It is not a hidden fact that in cities cases like car theft, vandalism and fraud are reported very frequently. Thus, auto insurance companies charge more from urban customers than those living in rural area or in countryside.
5. Install Safety Equipments: Although, car-manufacturing companies do install safety instruments like airbags and seat belts in cars but still, it would be beneficial on your part if you install additional safety devices such as anti-theft device, your vehicle identification number around the corners of the windows of your car. These precautions are very helpful when you are looking for an auto insurance policy. It will help you save a lot on the premium of your policy.
