Vehicle Insurance: Description of Vehicle Insurance

Vehicle insurance, in one form or another, is mandatory in every state. Almost all states require formal vehicle insurance policies, while other states only require proof that you have sufficient assets to cover any injuries or damages you cause.

There are six basic types of coverage available under vehicle insurance. To ensure you are financially covered for as wide a range of scenarios as possible, it is recommended you have coverage in these areas. Each state has a different minimum for each of these six areas. The state minimums are very low and will not be very useful in most situations. It is recommended you pay just a little more in your premium so you can be covered at a level where you will actually benefit.

  1. Bodily injury liability, depending on what type of coverage you buy, will cover the medical and even funeral expenses as a result of an accident. Personal injury protection (PIP) will cover these costs for the other driver and his passengers, as well as pedestrians, if you are at fault. In most states, bodily injury liability is the minimum coverage you can have for vehicle insurance.
  2. Medical payment (MedPay) will cover the medical expenses and funeral costs due to injuries you, covered members of your household and your passengers sustain in an accident; whether or not you are at fault.
  3. Property damage will cover any expenses incurred through the damage you inflict with your vehicle on another person’s vehicle or property.
  4. Collision coverage will pay the repair bills for your vehicle if you have an accident, whether or not you are at fault. Damage caused by potholes can also be covered by collision.
  5. Comprehensive coverage is to financially cover the cost of repairs for almost any damage your vehicle sustains, other than an accident. This coverage can include damage from fire, falling objects, severe weather, vandalism, as well as the damage done by hitting an animal. A crack in your windshield can also be repaired through your comprehensive coverage.
  6. Uninsured or underinsured motorist coverage will cover you in the event that you are in an accident that was the fault of the other driver and he either had insufficient insurance coverage, or the accident was a hit-and-run.
Vehicle Insurance: Description of Vehicle Insurance

Vehicle insurance, also known as auto insurance or car insurance, will financially cover you for an accident whether it was your fault or not.

Vehicle Insurance: Who Needs Vehicle Insurance?

You are driving home after a long day, your attention is drifting and you accidentally rear-end the vehicle in front of you. If it turns out you are at fault, how are you going to pay for the injuries and property damages sustained by you and the other driver? If you have vehicle insurance, then you know the answer to that question.

Different people have different reasons for having vehicle insurance. Some people need more coverage than others.

Gap insurance is important to you if you have bought or leased a new vehicle with a very small down payment. Gap insurance will cover you for the difference between what you still owe on the vehicle and what the vehicle is worth if it is totaled or stolen. The list of covered events for gap insurance is short, so make sure you go over them and include any perils that you think are possible.

There are three basic vehicle insurance categories for working vehicles and drivers. These types of policies can be for one vehicle, or if you have several vehicles on the road you can purchase a fleet insurance policy.

  1. Business vehicle insurance is necessary if you have vehicles you use for work. Contrary to common belief, your personal vehicle insurance does not cover a working vehicle.
  2. Commercial vehicle insurance is for people who drive transports and other delivery vehicles that require a commercial driver’s license (CDL).
  3. Bus insurance will financially cover bus drivers who drive a full-sized bus or a minibus, in case of an accident and many other perils.

Classic vehicle insurance will cover your older and antique vehicles much better than regular vehicle insurance, and is quite affordable too. Classic vehicles require special treatment, such as no mileage cap. Although the mileage probably already exceeds standard policy limits, you will probably not be driving the car very much anymore. To get the best vehicle insurance rates, go to an insurance provider that caters to classic vehicles.

Electric vehicle insurance is even more affordable than gas-powered vehicle insurance. This is because environmentally-friendly vehicles make an insurance company look good. Also, the image an electric vehicle owner projects is one of dependability. This gives the insurance company the confidence that this vehicle owner is not likely to have an accident and will pay his premiums on time.

There is a vehicle insurance policy for almost every kind of driver.

Vehicle Insurance: When Is Vehicle Insurance Required?

Vehicle insurance is mandated by almost every U.S. state. If your state does not mandate vehicle insurance, then it is necessary for you prove you are able to cover any expenses incurred in an accident for which you are at fault. Expenses include medical and funeral bills incurred due to bodily injury, and the repair or replacement bills for property damages.

When your state mandates vehicle insurance, there is a minimum requirement. For most states, this minimum is too low to effectively cover most accidents and it is highly recommended you increase your coverage in all areas of vehicle insurance. For example, California’s state required minimum is $15,000 for each person injured with a total of $30,000 per accident, and $5,000 for property damages. In a serious accident with multiple people injured or even killed, these amounts would not cover even a quarter of the accident’s costs. Vehicle insurance with more substantial coverage does not cost much more than the minimum coverage and is highly recommended.

You will need gap insurance for your brand new vehicle if it has a very small down payment and very few lease payments made. Gap vehicle insurance will financially cover you if your repair costs are higher than the vehicle’s actual cash value (ACV). Your gap insurance will cover the difference between what you owe and the actual cash value of your vehicle. Not all insurance companies offer gap insurance; however, some offer something similar called loan/lease payoff coverage.

If you use your vehicle for work, whether it is to run errands for your home business or your hired drivers deliver goods or transport people, you need vehicle insurance. Even if your state does not mandate commercial or business vehicle insurance, it is highly recommended. Working vehicles spend most of every day on the road, making the chance for an accident much higher than a personal vehicle.

When you live in a state that does not mandate vehicle insurance or has an extremely low minimum coverage requirement, it is very important to include uninsured/underinsured coverage in your vehicle insurance policy. This coverage will make sure you do not go bankrupt paying the medical bills and/or repair bills resulting from an accident, whether it was your fault or not.

A vehicle insurance policy is a good idea for anyone who has a vehicle on the road, because medical bills and repair bills are extremely expensive.

Vehicle Insurance: Rates For Vehicle Insurance

Vehicle Insurance: When Is Vehicle Insurance Required?

Vehicle insurance rates can be high but there are plenty of ways to bring your rates down. Steps you can take to bring the rate of your vehicle insurance premium down include:

  • Bundling your vehicle insurance with your home and life insurance policies at one insurance company.
  • Increasing the deductible on your policy to get a lower premium. You can even agree to a deductible that is over and above the compulsory limit to further reduce your premium rate. Just be sure the deducible stays within your budget.
  • Buying a standard, inexpensive vehicle with a small engine. This is because standard vehicle drivers take fewer risks and repairs are less expensive compared to high-powered or luxury vehicles.
  • Not commuting to work with your vehicle; taking public transportation instead.
  • Keeping your driving record clear of tickets and accidents for at least three years and you will receive a safe driver discount.
  • Staying with the same insurance company for a long period of time will get you a renewal discount.
  • Keeping a consistently good credit rating will make you less of a financial risk to the insurance company and they will offer you a lower premium rate.
  • Installing safety equipment in your vehicle, such as anti-lock brakes in older vehicles.

There are many traits that will allow for a lower vehicle insurance premium rate:

  • If you are over 25 years of age or under 65 years of age, you will have a lower premium than someone younger or older.
  • As you gain driving experience, your insurance rate will decrease.
  • A woman driver is less of a risk factor to an insurance company than a man driver. Fewer women have accidents because, on average, women do not take big risks while driving. This is based on data collected by the insurance industry.
  • Married people can receive a lower insurance rate because marriage often means the person is much more financially stable than a single person.

In 1996 the OnBoard Diagnostic tool (OBD-II) was made mandatory for all new vehicles. In addition to diagnostics, this device allows your insurance company to collect information on your speed, the time of day and the number of miles you drive. This data allows your insurer to offer you significant vehicle insurance rate discounts. Implementing this and other money-saving devices will keep your vehicle insurance rates down.

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