Car Insurance 101
By Greg Mauro
It is essential to have car for your vehicle. Accidents are a normal occurrence and they do not announce their arrival. Being prepared for all eventualities is prudence. Most importantly, car is mandatory by state laws. Therefore, you should have a through knowledge of different types of for your car, benefits of each, and choose accordingly. This will help you drive tension-free on the road.

Types of Car There are three main types of car each offering different coverage and consequently available at different rates.

1. Third-Party Only Insurance: This car cover provides for damages to other person or other person’s car in an accident. The accident may be due to the fault of any of the drivers. Therefore, you can claim coverage to pay medical bills of other driver or other occupants in his car, damages to his car, etc. This does not provide for any damages to your car or your medical expenses. Similarly, it does not pay for any losses due to theft of your car or damage due to fire, etc.

2. Third-Party Fire and Theft Insurance: This car policy provides coverage for your losses due to theft or damage due to fire. Additionally, this coverage provides for all damages to car and medical claims of other driver. This coverage does not provide any damages to your car or your medical expenses.

3. Fully Comprehensive Insurance: As the name suggests, this car provides coverage for all damages and losses. You can claim damages to your vehicle, your medical expenses, and damages to other person’s vehicle, medical claims of the other person or occupants in the other car, etc. irrespective of whose fault caused the accident. This is a total package.

Buying for Your Car

Normally, you can purchase your car from agents, auto dealers, etc. With arrival of the Internet, there are many more options for purchasing for your car. There are numerous companies on the Internet offering excellent deals at competitive prices. You can choose the one suiting you best by browsing through different quotes. Analyze carefully what each company offers and at what price.

Car Pricing

Different companies offer different prices for their car insurance. Normally pricing depends on many factors. The most important among them is your individual risk to the company. They need to assess how costly or risky you could be to the company. If you are a safe driver and drive within limits, you pay lower premiums. If you have a history of accidents and many prior claims,



you are a high risk to company and therefore they charge higher premiums to provide you coverage.

Besides, your age, sex, your car model also decides your premiums to quite an extent. companies offer car at lower premiums to female drivers as the intensity of accidents by lady drivers is considerably less, according to statistics. Sports car, luxury cars, etc. command higher premiums as replacement costs are higher and these cars are within high-risk category. Young and new drivers pay more insurance.

Legal coverage is essential to meet associated expenses in an accident. Such expenses could be loss of wages, medical costs, replacement costs, etc. Some costs could be beyond your control and your car could pay for such extra costs through legal cover available as an optional coverage with most companies.

Excess in car is the money you pay up-front while claiming damages to your car in an accident. Such claim could be voluntary or compulsory. You can claim such excess amount if somebody else causes accident. Otherwise, you lose such excess amount. Normally, companies stress on compulsory excess for young drivers as they pose higher risk to the company.

Discounts and Cost-Cutting Measures

It is true that car is a major expense but you can save a lot of money by availing different discounts. companies offer discounts for good drivers, safe drivers, etc. You can take precautions like fastening your seat belts to ensure a safe ride. Besides, park your car in proper garages and install safety devices like theft alarms, etc. Higher deductibles lower your costs. Do away with comprehensive if your car is very old. Similarly, combine different insurances under a single head to claim discounts.

Although car is mandatory, different states stress on different coverage and amount of such coverage could also differ considerably. Hence, you should choose of your car carefully to avoid being over-insured leading to higher premium costs. Ideally, your coverage should include bodily injuries coverage, liability coverage, and damages to property coverage. Additionally, you may need collision insurance, comprehensive insurance, rental insurance, etc.
Cancellation of Car Insurance

company can cancel your car in few cases. If you do not pay premium regularly, if there is any fraud or misrepresentation of facts, if your driving license is revoked or canceled during the term of your policy, if you commit any crime, etc. company can cancel of your car.
Greg Mauro is a staff writer at Insurance Facts

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