Car insurance is a type of car liability insurance policy that provides coverage for losses in the event of an accident. Car accidents can cause significant property damage, injury, and even death.
When car owners purchase car insurance, they are protecting themselves from financial loss in the event that they are responsible for damages or injuries caused by their car. If you’re considering buying car insurance, it’s important to know what this type of coverage does and doesn’t cover, so you can decide if it’s right for your situation.
How Much Does Car Insurance Cost?
According to Quadrant Information Services data for 2021, the average cost of car insurance in the United States is $1,674 per year for full coverage, or about $139.50 per month.
It’s important to know that car insurance is regulated at the state level, so car insurance companies can’t charge different rates based on a person or car owner’s race. However, generally speaking, car insurance prices or policies vary depending on where you live and your driving record. While not all companies use the same criteria, here is a list of what commonly determines the bottom line on your auto insurance policy:
- Your car
- Your location
- Your car’s model
- Your age and gender
- Your credit score
Car Insurance Coverage
Car insurance is purchased to compensate for damages or injuries that occur as a result of vehicle accidents. Car insurance is required by law, but car owners are free to decide how much coverage they want and what car insurance company to purchase car insurance from.
- Liability Coverage: This car coverage will protect you from financially liable damages or injuries caused by car accidents in which you are at fault.
- Medical Payments Coverage: This car coverage pays for immediate medical expenses of car accident victims, regardless of who is at fault.
- Uninsured/Underinsured Motorist Coverage: This will protect you if you’re involved in a car accident caused by another driver who does not have car insurance or does not have enough car insurance.
- Comprehensive Insurance: This will reimburse you for any damages to your car caused by non-accident events, such as car theft or car vandalism.
- Collision Insurance: This car coverage reimburses you for damages to your car caused by car accidents.
- Gap Insurance: If your car is totaled or stolen, this car coverage pays the difference between your car’s value and how much you still owe on it.
- Towing and Labor Costs: This car coverage pays for towing and labor costs in case your car breaks down, or you need help changing flat tires.
- Classic car insurance: This insurance is an affordable way to insure your vintage car.
Not Covered by Car Insurance
There are a few instances in which car insurance does not cover car owners. These are:
- Damage or loss to car parts that did not come standard with car insurance.
- If driving under the influence of alcohol or drugs.
- If car owners are injured while participating in illegal car races.
- Driving without a valid car insurance policy or driver’s license.
- If car owners participate in criminal activity, car theft, or car vandalism.
- If your car is damaged due to car borrowing or car renting.
- If car owners cause car accidents while driving a car that does not belong to them.
What Else You Need To Know About Car Insurance
Car insurance is a very complicated and personal decision. Insurance providers can make it difficult to compare prices because the cost is based on certain factors like your age, gender, and location. It’s important to be aware of what these factors mean and use them as data points to develop the best strategy.
It is also important to understand the different types of insurance and what they cover. Understanding your policy and coverage will help prepare for an accident or other event that may cause financial hardship. With the right plan, you may be able to get back on track faster if something happens.
Lastly, you should familiarize yourself with car insurance laws in your own state. Car owners who do not know car insurance laws may be breaking the law without even knowing it.
The best way to figure this all out? Consult with a professional who knows about insurance or learn more about car insurance and car coverage online through our auto courses on Wealtheo™.
Visit our website and check out our auto courses for more information.