Buying a used car by yourself is an accomplishment you should be proud of, but when you buy a car, you will also need auto insurance. Auto insurance is not something you can drive without, as it is legally required. If you are new to this, here is a guide to help you comprehend the basics of how auto insurance works.
You May Have the Choice on Coverage Types
As the owner of an auto insurance policy, you get to choose the coverage types you want. However, if you have a loan for the vehicle you just bought, you will not get to choose. You only get to decide if you paid cash for the car and own it outright.
When you owe money on the car, the lender tells you that you need full coverage insurance. Full coverage insurance includes several different types of protection. If you do not owe money on the car, you do not need full coverage and can choose minimum coverage if you desire.
An Explanation of the Coverage Options
If you can choose the coverage options, it is wise to learn what each type is. Here is a breakdown of the main types you can choose from:
- Liability – As a driver, you must offer protection for other drivers, and you can do this by purchasing liability protection. If you hit another car, liability pays the damages to the other driver.
- Collision – You can choose this option to have protection on the vehicle you own. If you hit another driver, collision covers you and the damages you incur.
- Comprehensive – This type covers other types of incidents that damage your car, such as hail or deer collisions.
- Uninsured and underinsured – You may also need these two options, which generally come together. They protect you if a driver collides with you and has no auto insurance.
Each option covers specific things, and you should carefully consider which ones to select.
A Deductible Also Matters
The other essential part of an auto insurance plan is the deductible. You can choose what this amount is, but you should make sure you know how it works. When you collide with another vehicle and need repairs for your car, you pay the deductible before the insurance pays the repair bill. A deductible is only present when you have collision or comprehensive coverage.
If you have further questions about coverage options, types, or costs, talk to an auto insurance agent in your city.