Car insurance – what is it?

If you've just bought your first car or simply don't know what car insurance knowing the essence of it is a must. After all, it's not that complicated so don't worry. Car insurance is an agreement between the customer and the insurance company that the insurer will cover the costs associated with accidents and other situations (depending on the coverage types included) in return for a fixed premium paid by the customer on a regular basis. If put simple, you get the opportunity your costs to be paid after an accident by paying a regular fee in return. Now, the situations and the amount of money that such an agreement includes makes a huge difference when it comes to the final price of the policy. So here are different types of car insurance coverage that you should consider buying (or not) in order to secure your car properly:

Third party liability coverage

Consisting of property damage and bodily injury this type of coverage is the basic and the only one that's required by law. It pays to the other party for the damage and injuries respectively in case you were at fault in the accident. Respectively, if the other party is at fault you'll be reimbursed with their third party liability coverage. There are minimum requirements concerning the amount of this coverage in each state that are set with the purpose of covering an average accident by current repair and medical costs. There's no way you can buy a policy without this type of insurance.

Collision and comprehensive coverage

These two types of coverage are often bundled into a single offer by insurers since they are complimentary and provide a great deal of security. Under collision coverage you get paid by the insurance company in case your car collides with another vehicle or object while on the road no matter who's at fault. Comprehensive coverage deals with all other types of damage starting with storms, fire, explosions to theft and riots. A lot of lending institutions require their customers to purchase these two coverage types as well when giving out an auto loan. So you may see these options included to your car insurance policy as well.

Uninsured motorist coverage

This should be on your "to get list" if you're living in an area with a lot of uninsured drivers. The main risk when having an accident with such a driver is that they won't cover your losses if they are at fault since they have no car insurance. When buying uninsured motorist coverage it acts like if it were the other party's insurance company paying for the damage. And this might come in handy since there are millions of uninsured drivers out there.

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