Auto insurance is required by the state and provides you with some financial protection in the event of an accident. But is this enough? What options are available? Learn how car insurance works and what types of coverage are available. The amount of the motor vehicle insurance is based on the no-claims bonus class.
The basics of auto insurance
Car insurance is a contract between you and the insurance company that protects you from financial loss in the event of an accident or theft. In exchange for paying a premium, the insurance company agrees to pay your losses as outlined in your policy.
Auto insurance provides coverage for:
- Property – how z.B. Damage to or theft of your car
- Liability – your legal responsibility to third parties for personal injury or property damage
- Medical – the cost of treating injuries, rehabilitation
Policies are usually issued for a period of six months or one year and are renewable. The insurance company sends a notification when it is time to renew the policy and pay your premium.
Who is covered by my car insurance – and under what circumstances?
Your auto policy will cover you and other family members on your policy, whether driving your car or someone else's car (with their permission). Your policy also provides coverage if someone who is not on your policy is driving your car with your consent.
Your personal auto policy only covers personal driving, whether you are commuting to work, running errands or taking a trip. It doesn't provide coverage if you use your car for commercial purposes – for example, if you deliver pizzas.
Is car insurance compulsory?
Auto insurance requirements vary depending on what you value. And likewise on their car itself. For a Golf, for example, you'll find it easy to find cheap Golf 4 insurance. When you finance a car, your lender may also have its own requirements. Almost always, car owners are required to do the following:
- Bodily Injury Liability – the costs associated with injuries or death that you or another driver causes while driving your car.
- Property damage liability – compensating others for damage you or another driver operating your car causes to another vehicle or property, such as a fence, building, or utility pole.
What other types of auto insurance are typical?
While most basic, legally required auto insurance covers the damage your car causes, it doesn't cover damage to your own car. To insure your own car, consider these optional coverages:
Collision compensates you for damage to your vehicle caused by a collision with another vehicle or object – z.B. a tree or guardrail – occur if you are at fault. While accident coverage does not compensate for a mechanical defect or normal wear and tear on the vehicle, it does cover damage caused by potholes or rolling of the vehicle.
Comprehensive coverage against theft and damage not caused by a collision, such as fire, flood, vandalism, hail, falling rocks or trees, and other perils – even from an asteroid!
Glass cover provides protection against damage to the windshield, which often occurs. Some auto policies are non-deductible glass coverage, which includes side windows, rear windows and glass sunroofs. Or you can purchase additional glass coverage.