When you own a car, you face the risk of accidents and unexpected circumstances. In an accident, you may face bodily injuries, damage to property, damage to a vehicle, and damage to someone else’s property. It can lead to legal and financial issues, which can be prevented by a car insurance policy. Moreover, in case of liability, you may face financial difficulties.

Terms associated with car insurance

Before you can compare car insurance plans, you must be aware of some essential terms. These terms are as follows:

Liability

Liability insurance refers to covering the cost of damage to someone else’s property or causing injury to someone. In liability insurance, you are responsible for causing damages to one’s property. Moreover, if someone else was driving your car, your liability insurance policy also extends to them.

Deductibles

Deductible refers to the money that you pay to an insurance company before they cover damages and injuries. For small accidents, it makes sense to pay out of your pocket, instead of asking the car insurance to cover. However, in cases when the damages are hefty, it is better to file a claim with the insurance company. For collision and comprehensive coverage, you require deductibles.

Claim

When you file a claim with a car insurance company, it means that you are requesting compensation to cover damages.

Car hire cover

In the case of an accident when your car is undergoing repair, your insurance company will provide you compensation for alternate travel and vehicle arrangements, for example, renting a car.

Coverage

There are different types of coverage, namely collision, comprehensive, personal injury protection coverage, uninsured motorist, and others.

In collision coverage, the insurance company provides compensation in case of an accident which was caused by someone else. Comprehensive coverage pertains to several unexpected circumstances, including theft, damage due to natural disasters (storms, hurricanes, and floods), etc. In comprehensive insurance, there is no one liable for damages to a car. Personal injury protection coverage is for medical expenses due to injury from an accident.

Choosing a car insurance policy

A car insurance policy is composed of liability and deductibles (comprehensive and collision coverage). Before you approach a car insurance company, you need to know the requirements. The minimum requirement for car insurance varies from one state to another. The minimum requirements for California car insurance (liability) are as follows:

• Injury or death of a person: $15,000

• Injury or death of more than one person: $30,000

• Property damage: $5,000

When choosing an insurance policy, you have to choose the limits on various coverage. Most states have a low limit. In case of a major accident where the damage amounted to more than the limit, you have to pay the difference out of your pocket. Hence, when choosing limits, you need to determine if you require higher limits or not. A liability claim does not require a deductible.

A basic coverage plan covers bodily injury liability, property damage liability, and motorist bodily injury coverage.

Conclusion

Look for multiple car insurance companies before you choose one. Compare their annual rates and the policies that they offer to make an informed choice.