If you’re a first-time car buyer or new to handling personal finance matters like buying insurance without experience, you will be overwhelmed by the amount of information available everywhere. There is no clue where to start and you have no idea what is important, and what is non-essential in this pursuit for the right insurance policy for your car. There is no concept of beginner’s luck in buying insurance unless you traverse the myriad terms and try to evaluate different policies.
Whenever there is an accident that involves your car, insurance helps cover the damages. The amount and variability of benefits are based on the policy opted. The cost and terms of policies differ between providers. Surveying the policies before buying one that fits your requirements will take a small effort that will prove its worth in the long run. As a beginner, you may be more inclined towards affordable auto insurance options. However, due diligence based on other important parameters that will impact a claim in the future is an imperative step.
Here is a guide to help most people who need these pointers before buying their next auto insurance:
Types of Insurance
Depending on the type of insurance one opts for, the cost and benefits are determined. In auto insurance, there are broadly 4 categories of insurance that are available in the market. They are namely:
- Liability Insurance
- Collision Insurance
- Comprehensive Insurance
- Customized Package
- Liability Insurance
As the name suggests this insurance covers any liability you incur when you hit others car or property. This insurance also has an indemnity clause that protects you from legal fees in case you are sued by the opposing party in an accident. This type of insurance is a minimum requirement in every state to drive.
- Collision insurance
This insurance covers damages both ways in an accident. For instance, you can claim for repairs incurred even when you are not at fault and the accident was caused by the opposite party.
- Comprehensive Insurance
Cars damaged due to natural disasters or theft are covered in this insurance including the liability and collision clauses.
- Customized Packages
Depending on the state you live and own the car in, there may be a requirement to buy extra insurance like personal injury protection.
Conclusion:
Auto insurance is a mandate in most states and it is illegal to drive a car that is not covered. Buying a car is your first step to personal independence in a country like America. However, most first-time drivers would get their first cars when they turned sixteen. Often these cars are gifts from their parents or guardians who look into the paperwork related to auto insurance as well. As a result, many people may not be beginners in owning a car. Although they own and drive a car well into their early twenties, most people are not exposed to the nuances of choosing auto insurance. If you find yourself in this category, the above points should be a starter tool kit to aid you in the right direction.