Understanding Car Insurance And Why You Need It

We live in a world where nobody can tell what will happen tomorrow. It’s a world full of risk. The risks include loss of life, body injuries, among others.  While preventing these accidents is not always possible, financial companies have come up with ways to compensate people financially.

Examples of such financial institutions include car insurance companies. For everyone who owns a vehicle, car insurance is very important to have.

What Is Car Insurance?

Car insurance refers to an existing contract between you and an insurance company that keeps you protected against any financial losses in case you have an accident, your vehicle gets damaged or if your car is stolen at some point.

How Does Car Insurance Work?

You have to find an insurance company that offers car insurance, and then pay them a premium. This car insurance company then agrees to pay you for any losses incurred depending on the policy that you chose.

Why Do You Need Car Insurance?

There are so many reasons why any car owner needs insurance. Some of them include:

Car Insurance Protects You And Your Family

Remember, your family members always depend on you and are entitled to the car you own. They will also be riding in it so it’s important to keep them safe from any financial hardship that may arise because of your owning that car should anything out of the ordinary happen.

Car Insurance Reduces Your Level Of Stress In Hard Times

We can never tell what lies ahead. Sometimes unforeseen tragedies face drivers and passengers. They include injuries, accidents and many others that could leave you emotionally stressed. So, car insurance reduces this stress so that you can focus on getting better and rebuilding yourself.

Car Insurance Gives You Financial Security

You may be very well off today but you do not know what tomorrow holds. The unexpected could suddenly happen and leave you in a worrying state financially when it comes to your car. Car insurance usually pays you out in case of unforeseen car incidents.

Car Insurance Grants You That Much-Needed Peace Of Mind

Nothing can ever replace the importance of your health. However, you can rest happily knowing that should anything happen to you while you’re driving your car, your insurance will help you with financial security.

What Are The Types Of Car Insurance You Can Get?

There are different types of car insurances. They include:

Liability Car Insurance


•Pays for victim’s damaged property •

Covers victim’s medical bills

•Doesn’t cover your injuries

•Amount paid has a limit

•You pay from your pocket when limit is exceeded

•Limit depends on insurer

This car insurance type is helpful especially when you are at fault in case of a car accident. It covers the financial damages to the other party.

This type of car insurance is a combination of both bodily injury insurance and property damage insurance types.

The car insurance will first pay for the expenses from the injuries then compensate for the damaged property as their specific names state.

In many places, for you to even be allowed to drive you need to have some kind of liability coverage. It’s either that or any other kind of financial responsibility guarantee.

This is only fair as it ensures that any driver out there who somehow ends up hurting anyone or one who damages property on the roads will compensate the injured or affected party.

When you go about buying this type of car insurance, you will have the limits broken into the three numbers which are also called split limits.

These car insurance’s split limits tell you the maximum amount that can be paid in case of bodily injuries for a single individual, for all people who were involved in the car accident and the damage to property respectively.

Should there be any damage that exceeds the limits indicated in this car insurance, you’ll have to pay from your own pocket.

Bodily Injury Liability


•Covers victim’s medical expenses

•Covers victim’s lost income

•Covers your legal fees

•Subject to a per-person limit

•Subject to a per-accident limit

This car insurance is the most common one since it’s the one that will cover you in case you are the cause of an accident that ends up either killing or injuring other people.

Your car insurance company is in such cases responsible for paying all the other involved party’s medical expenses. They will also cover any lost wages and also funerals if any

The other advantage is that it also covers legal fees should the other party decide to sue you.

Property Damage Car Insurance


•Covers damage on victim’s vehicle/property

•Doesn’t cover damage to your property

•Subject to a limit

•You can choose your preferred limit

•The higher the limit the higher the premium

This type of car insurance covers any kind of damage caused on somebody else’s property. For example, if you ran into someone’s house or the rear of someone’s vehicle, property damage insurance would have you covered.

The amount of property damage that’s usually paid by every driver depends on where they live. While you might find it quite tempting to pay just the minimum coverage, keep in mind that any damage whose cost goes above your car insurance limit will be paid for from your own pocket.

You should also know that this type of car insurance does not cover your car.

Physical Damage Car Insurance


•Has collision insurance

•Has comprehensive insurance

•Collision insurance covers your vehicle repairs or replacement

•Comprehensive insurance covers any kind of damage other than collision

•You must choose a deductible amount

When you crash into someone else’s vehicle or hit something that damages your car this type of car insurance will cover the cost of repairs.

There are two types of coverages when it comes to physical damage car insurances. They include collision and comprehensive whose difference is based on the circumstances under which your car got damaged.

Collision coverage car insurance – this coverage will pay for repairs done on your vehicle in case you’re the one who caused the accident. Often, fault is placed on the driver even if it wasn’t so the car insurance company will pay for repairs while it tries to prove that you were innocent in an attempt to get the full amount back.

Comprehensive coverage car insurance- this insurance covers issues that include theft, any damage from natural causes or disasters and vandalism. This car insurance generally covers the physical damage that won’t be covered by collision coverage.

This car insurance involves a separate deductible amount that you’ll be required to pay for every such incident by yourself before the car insurance company steps in to cover the rest.

This deductable amount will vary from one car insurer to another. The amount you will choose to have deducted will to a great extent affect your premium.

Rental Car Insurance


•Could include liability coverage

•Could include comprehensive coverage

•Could include collision coverage

Some car insurance companies will extend their insurance cover to rental vehicles. Make sure you check for this thoroughly before you rent the car.

What’s The Most Important Car Insurance To Have?

The most important car insurance is liability and property damage insurance.  In case you are unfortunately involved in a car accident, you risk completely losing your driver’s license if you don’t have it.

If you get into an accident without it you could also face huge penalties and bills from the damages.

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