Car Insurance ensures financial protection to the owner of the car when there is an accident or theft. As per the contract between the policy holder and the insurance company the policy holder has to pay the premium to the insurance company and in return the insurance company assures coverage for theft or damage of the car, coverage for body injury liability and property damage liability when the policy holder causes body injury or property damage to others and coverage for medical expenses for providing treatment to the driver and passengers of the car which includes in addition to medical expenses, lost wages, expenses incurred for replacing the services normally performed by those who injured in the accident and also funeral expenses. For all the states in the US basic car insurance is mandatory and the prices of car insurance policies are worked out individually after considering the exact requirements of the policy holder as well as his budget. The laws pertaining to car insurance vary among the states. The car insurance policy will be for 6 months or one year and it can be renewed. For payment of premium as well as renewal of policy the insurance company will send reminders to the policy holders.
Who are covered by the Car Insurance policy?
The car insurance policy will cover the policy holder and other members of his family who are on the policy. The coverage is provided when the policy holder drives his car or car of another person after obtaining his permission. When a person who is not in the policy drives the car of the policy holder with his permission he is provided with coverage. Personal car insurance policy covers only personal driving which includes commuting to work place, going on a trip and errands running. When the car is taken out for commercial purposes there will be no insurance coverage. When the car is used to provide transportation to other people under ride-sharing agreement, the insurance coverage will not be provided. However, the car owners can buy supplemental insurance policy offered by a few auto insurance companies when they provide ride-sharing services.
While the basic car insurance policy provides coverage to the damage caused by the car it will not cover the damage to the car of the policy holder. In case the policy holder wants coverage for his own car he has to go for optional coverages for Collision, Comprehensive and Glass Coverage. The optional coverage for Collision will provide reimbursement when the car owned by the policy holder is damaged as a result of collision with another vehicle or object. Comprehensive will cover theft and damage which occurs following an incident other than collision like vandalism, falling rocks or trees, other hazards, flood, fire or hail. Damage of the windshield of the car is covered by Glass Coverage.
The optional coverages for Collision as well as Comprehensive will cover just the market value of the car and will not reimburse the entire amount spent by the policy holder. But, depreciation of cars is very fast. In case of a theft or an accident, there will be a “gap” between the actual amount spent by the policy holder and the actual coverage provided by the car insurance policy. Those who purchase gap insurance can get the differential amount also covered by the insurance policy.