Car insurance comes in many types and sizes. You can buy car insurance that will cover almost anything that might happen to you or your car. Many car insurance policies cover theft, vandalism, collision, and liability and may add towing, car rental and emergency roadside assistance. You do not have to buy this much insurance. What do you get when you buy a basic car insurance policy?
Basic car insurance must provide enough coverage to meet state requirements.
All car owners know that if you are going to license your car, you have to meet the minimum liability insurance amounts mandated by their respective state. The exact amounts are not the same in all states, but they are similar. Once the insurance policy has met the state standard, nothing else has to be legally added onto the plan.
All that you get with a basic car insurance policy is liability insurance.
With basic car insurance, you do not have to fear most law suits that may result from an accident. The policy will pay for the damage to property and the other vehicle. It will also cover injuries to the driver and passengers in the other car. If bystanders are hit, they will be insured. If you hit a pedestrian, your insurance will extend to provide for their medical costs.
If you have a loan on the car, you may have to consider collision as part of your basic car insurance.
While collision insurance is technically an addition to your basic policy, your bank will usually require this type of insurance as a condition for issuing you a loan to buy the car. Because of this, collision insurance must be considered as a type of basic coverage.
Collision insurance serves two purposes.
It will pay to repair your car after an accident. If the accident was bad enough, it will pay to replace your car. Usually, this money is used to retire the outstanding debt. Some lenders will work with you to use a portion of the money to reduce the loan and a portion to help secure another car. You have to check with the bank for the specific policies regarding this.
Basic car insurance leaves a lot uninsured.
If you are not careful, you may leave more of your risk uninsured than you expect. Basic insurance does not include comprehensive. This means that your car is not insured for storm damage in most cases. You also do not have coverage for glass breakage if a rock hits your windshield. Your car may not be insured if it is stolen. Basic insurance will also leave out uninsured and underinsured motorist coverage. This could be costly if you have a really bad wreck with an uninsured driver. The passengers in your car will not have extra medical coverage if they are injured. You will not get a rental car while yours is in the body shop. Towing and road hazard coverage will also be absent.
