If you’ve never purchased a car before, you’re going to need to know about car insurance. While there are a lot of nuances to auto insurance, you should at least understand the basics so that you get the coverage you need.
Liability vs Full Coverage
The difference between liability coverage and full coverage is probably the single most important thing you need to understand about auto insurance. Liability insurance only covers damage that you do to others in the event of a car accident. The insurance company will issue payment to cover the other party’s vehicle damages and medical costs if you are determined to be at fault in the accident. Most states require a minimum of liability insurance to be held on all vehicles.
Full coverage, on the other hand, covers the damage to the other party’s vehicle and their medical costs, as well as damage to your own car and your own medical costs. Additionally, full coverage will provide reimbursement for non-collision incidents, such as theft and vandalism. If you lease or finance your vehicle, your lender will likely require you to have full coverage on your vehicle until it is paid off. There is a deductible you’ll need to pay first.
Mandatory Coverage
As mentioned above, all states require minimum liability coverage on any vehicle on the road. The two components of this minimum coverage are bodily injury liability and property damage liability. The bodily injury component pays for costs associated with injuries and death that are caused by you or another person driving your car. The property damage component pays for costs associated with the other party’s damaged vehicle or property that is caused by you or another person driving your car.
Optional Coverage
Even though there are several auto insurance components that are considered optional, they are usually only optional if you purchase your car outright or if you pay off your car loan. These components are collision insurance, comprehensive insurance, and glass insurance. However, it’s a good idea to have full coverage on your car at all times, even if you’ve paid it off, just to be safe, unless the cost of the insurance is more than what the car is worth.
Collision Insurance
This is the insurance component that covers damage to your vehicle that was caused by an accident when you’re at fault. If you’re not at fault, the other party’s insurance will cover these costs. This insurance does not cover damage related to mechanical failure or normal wear and tear. This insurance will be required for financed and leased vehicles.
Comprehensive Insurance
This insurance component covers non-collision-related issues such as theft, vandalism, and natural disasters. Finance companies will usually require you to carry this type of insurance on your vehicle until you pay it off.
Glass Insurance
Usually, glass breakage is covered under comprehensive policies, but you’ll have to pay the deductible before the insurance company pays any portion of the damage. Typically, deductibles are higher than the cost of replacing broken glass. Insurance companies offer glass insurance as an additional option, which will cover glass replacement without a deductible.
Don’t be caught without auto insurance! Contact Fox Lexus of El Paso to learn more about auto insurance – and perhaps even help you find a new ride!
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