The Basics of Car Insurance for Beginners

Carrying a car insurance policy in the state of California is mandatory. Auto insurance is essentially a collection of policies that cover, among other things, damage caused by a covered peril, theft, and third-party liability claims arising from a car crash. For instance, if your car gets damaged in a car crash, the collision component of your auto insurance policy will cover a portion of your vehicle repair or replacement costs.

Types of Car Insurance

Auto insurance comprises multiple policies, each providing protection against specific perils. Common types of car insurance policies include:

  • Liability insurance – This is the portion of car insurance that pays for the resulting expenses if the policyholder’s car causes bodily injury to a third party or damages their property. It covers medical expenses, legal expenses, property replacement costs and is mandatory in most states.
  • Collision coverage – Regardless of who is at fault, this coverage pays for the cost of repair or replacement of your car in the event of a collision with another car or object.
  • Personal Injury Protection (PIP) – As the name implies, this coverage pays for the policyholder’s medical costs and lost wages, if any.
  • Comprehensive insurance – This policy covers loss or damage caused by a wide range of perils, including natural disasters, vandalism, and fire. Unlike collision insurance, however, it does not pay for collision-related damage or loss.
  • Uninsured motorist coverage – This portion covers the financial losses that may result if an uninsured driver hits you.

How Much Car Insurance is Enough?

In general, coverage needs vary from motorist to motorist depending on factors such as car model, average annual mileage, and driving history. For instance, teens aged 16 – 19 are more likely to get involved in a car crash than any other age group. Due to the high risk involved, a teen driver will require more coverage than an older, experienced, and careful driver. Similarly, a more expensive car model will require more coverage than a cheaper one, due to the high maintenance cost.

Tips to Buy Auto Insurance

In 2019, about 1 in every 8 motorists in the U.S. didn’t have car insurance. The high cost of insurance is among the top reasons for uninsured drivers in the U.S.  A few tips to lower your auto insurance costs include:

  • Shop around – Insurance costs vary across different insurance companies, and hence, it is possible to get your preferred coverage at a more affordable cost.
  • Ask for discounts – Some insurance providers give discounts to policyholders. Common car insurance discounts include safe driving discounts, anti-theft discounts, accident-free discounts, low-mileage discounts, and bundling discounts.
  • Choosing the right deductible – A high deductible translates to lower car insurance premiums and vice versa.
  • Taking defensive driving courses – This can help lower insurance costs due to reduced risk.
  • Maintaining a good credit score – Typically, insurance companies consider policyholders with high credit scores low-risk and vice versa. As such, it is possible to get lower car insurance rates by just maintaining a high credit score.

For all your auto insurance needs, contact our experts at Modab Insurance Services. We will help you get the right insurance coverage custom-tailored to meet your unique needs.

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