Choosing a car is not the only thing that you have to think about when you’re buying a new car. You also need to think about car insurance coverage. You need to remember that even before you drive off the car lot with your brand new car. Most states will demand that you have at least the minimum car insurance coverage.
First of all, car insurance isn’t just an additional expense that you have to pay every month for you to drive. It’s a form of financial security that you need to protect yourself while on the road.
You’ll probably think that it won’t happen to you, car accidents do happen and it can happen the least you expect it to. You may be a careful driver, but there are times that our judgment on the road may be wrong. This could cause accidents and damage to property and possibly injure someone in the process. This is where car insurance is useful. It covers you financially by paying for all or some of the damage caused by the auto accident.
The problem with shopping for car insurance is that there are terms and jargons in contracts that everyday people like us don’t understand. It’s essential that you know what you are reading in the car insurance policy you plan on buying. You need to choose the right one and get the right amount of coverage you need.
So, here are the typical terms you’ll find in a car insurance policy.
You’ll often find this word in car insurance policies and will let you choose if you want a high deductible or a low one. A deductible is an amount you need to pay for repairs before your car insurance releases the money for the total cost of repairs.
For example, let’s say that you’re involved in a minor accident and you were found to be at fault. The price of repairing the car of the other driver involved is estimated to cost 3,000 dollars. Your policy states that you have a deductible of 500 dollars. What this means is that you need to pay 500 dollars out-of-pocket before the car insurance provider covers the rest of the repair cost.
Car insurance premium
The car insurance premium is another term you need to learn and understand. The premium is the amount you need to pay to get covered. You have the option to choose your payment frequency. You can pay monthly, every three months, six months, or yearly.
Keep in mind that the amount of premium you have to pay will vary from person to person. It will vary on the type of car insurance you buy, your age, the amount of deductible you choose, your car, and your driving record.
The coverage limit is another term you have to understand when buying car insurance. It describes the maximum amount of money that the policy will pay for. If you exceed the maximum coverage limit, you’re liable to pay for the remaining cost for damage repairs caused by accident.
These are the basic terms you have to understand when purchasing car insurance. Understanding these terms will make it easier for you to fully comprehend what the insurance agent is saying and also what the car insurance policy document is describing.