One question that a lot of people ask is why they need car insurance. The problem is, by the time an accident occurs and you really find out why, it can be too late. Car insurance coverage protects both you and your property in a worst case scenario. It’s so important, in fact, that the federal government demands that all states enforce insurance laws. Driving uninsured is a risk to you, to your property, and to the people around you. The next question that people tend to ask at this point is what different types of car insurance there are. That one is a little easier to answer.
Every state requires a different limit for coverage. The federal mandates are the lowest accepted coverage amounts, but they aren’t always the best option. Cheap car insurance coverage is explained as three different numbers (i.e. 20/20/50) that represent liability for property damage and liability for bodily injury for all persons involved in an accident. These numbers describe the amount of compensation that will be provided under the insurance policy, and the problem is that the government regulations aren’t always enough to cover even the basic accident situations.
Liability for bodily injury is a requirement of every single U.S. state. If you cause an accident that injures another person, you are responsible for paying for their medical bills and any rehabilitation. Depending on the situation, this can add up to tens of thousands of dollars in the end. Liability for property damage is also mandated by the state, and it provides car insurance coverage for any expenses stemming from property damage caused by you as the result of an accident. By not having this basic liability coverage, you would be responsible for every aspect of payment in the event of an accident which could spell financial ruin.
3 Common Riders
Liability coverage, as well as personal injury protection, forms the basis of any car insurance coverage policy. However, there are a lot of options for add-ons that can save a lot of money in the long run. Rental reimbursement will pay for the cost of a rental if your car is in the shop after an accident. Without coverage this expense alone can be several hundred dollars in a week. Towing coverage pays the auto shop that needs to tow and work on your car. The third rider is called gap auto insurance, and that bears an in depth explanation.
The 3rd Rider
Gap car insurance coverage is used in the event that your car is completely totaled as the result of an accident. The definition of totaled is “beyond repair”. Gap auto insurance, also known as the Umbrella rider, pays the difference between the determined cash value of the vehicle and the full amount remaining on the auto loan. This is a huge benefit, especially if you still have payments to make on the car, which you would still be liable for even if your car was totaled in an accident.
There are other differences per state, such as the necessity to be covered against uninsured or underinsured drivers. With all this in mind, it’s easy to see why car insurance is not only a legal requirement, but a recommendation. To find cheap auto insurance, enter your zip code above and we will search for the cheapest quotes for you.