Every car buyer goes through a checklist before purchasing his or her new car. The most important aspect of the list is auto insurance and car insurance rating.
Car insurance acts as a protection for your car as a whole. Your insurance agent can offer you a wide range of motor insurance policies depending on the type of vehicle you own, the amount of cover you need and the number of years you wish to have protection for, in exchange for an annual sum, known as the insurance premium.
When you are involved in a car accident, the cost of damages to the car is covered by the car insurance you choose, however, this does not include any damage caused on top of the total car insurance amount.
The assessed value of your vehicle insurance is calculated from the IDV or Declared Insured Value of your vehicle; IDV is the maximum amount that the insurance company will pay for the damages that your car will suffer.
The IDV amount is approximately equal to the current market price of the car you own or the showroom price of your car. Thus, IDV is not a constant value and keeps changing periodically. On renewing your car insurance after one year, the IDV value will decrease due to the amount of depreciation charged after one year.
What are the damages covered by car insurance?
Car insurance will not cover all damages that your car faces during the life of the insurance. Coverages in the US are usually seen in a group of three numbers separated by a hyphen, for example, 20/50/30 or 100/500/100. The first two numbers are usually seen for medical coverage.
For 100/500/100, the insurance company’s policy will pay $100,000 per person up to $500,000 combined for all people. The last number covers property damage, which is any vehicle or other property you hit in an accident.
A comprehensive auto insurance plan will mainly cover the following types of damages:
Coverage commonly known as casualty insurance primarily covers bodily injury and property damage, which is damage to your car. However, the sum insured will vary from one jurisdiction to another. The insured is also allowed to increase the amount of insurance cover (before loss), to cover any loss incurred during the accident.
If in some unfortunate circumstance, you hit a telephone pole with your car. In such a case, liability coverage covers the cost of damage caused to the pole. However, it does not cover any other expenses related to the damage caused such as the interruption of services claimed by the telephone company.
A bodily cover covers the insured from possible injury during the accident as well as covers him from any third party damage caused by the accident. Coverage covers court costs and damages for which the insured is sued.
Comprehensive coverage covers both collision and comprehensive damage caused to your vehicle. Collision coverage covers the vehicle involved in the collision, paying to repair the damage caused or paying the cash value of the vehicle if the vehicle is not repairable.
Comprehensive coverage covers the vehicle against damage that is not normally considered collision damage. Damages covered by this coverage are damages due to theft, vandalism or animal impact. In addition, many insurance companies also include ‘Act of God’ damage which is any damage caused by an event or events caused by factors beyond human control, such as cyclones, tornadoes, tsunamis, etc.
In addition to the main coverages mentioned above, insurance companies in the US also offer the following coverages:
- Damage caused by uninsured/underinsured motorist (UM/UIM)
- Loss of use
- GAP coverages.
- Repayment of Rent/Loan.
- Road Emergency Service Coverage.
- Mechanical breakdown coverage
- Custom parts and equipment coverage.
How can you calculate a car insurance estimate?
You can follow these simple steps to get your car insurance quote correctly:
- Before you buy a car, narrow down your choices.
- Determine the amount of coverage you will ideally need. If you are buying a new car, you should look for insurance that also covers collision and comprehensive damage. However, this is not mandatory in the case of a used car.
- Compare insurance quotes for your vehicle. Different companies will have different insurance costs for your vehicle depending on the type and market price of the model. Comparing quotes will help you narrow down the best insurance for your car.
- Make your final choice based on the comparison chart.
What should be the ideal car insurance rating?
There are many factors that affect you car insurance estimate. Ideally, you should choose a plan and a lot, which covers most of the possible damages that your car may suffer during its lifetime.
The amount of insurance you have chosen should usually be higher than the actual cost of your overall car.
The final car insurance quote will ultimately depend on your choices and individual situation. It is always advisable to look at a wide range of options and companies that offer auto insurance after you have calculated your car insurance estimate
. Comparing insurance quotes and what they cover against each other will ensure you get the most out of your car insurance.