Sunday, August 5, 2018

USA: getting to know your car insurance and how to prepare for it


Car insurance is a financial product that lessens your financial losses in the face of damaging events involving your car or you as a driver. Auto insurance is technically a product you buy, but it’s one that, ideally, you’ll never use.

You’ll often hear car insurance talked about in terms of the protections it offers you. However, unlike protections that keep an event from happening – like brakes, an alarm system, or a levy – car insurance protects you from loss that results from those events. It’s after-the-fact protection that helps minimize the impact of a damaging event.




Auto insurance policies, like collision and comprehensive insurance, are typically tied to your car, while other types of car insurance coverage, like liability and non-owner car insurance, are tied to you as a driver. No matter the type of coverage, everyone needs some type of car insurance. For one, most states require that you have some car insurance coverage. Even if it isn't required, though, car insurance is worth having.

In addition to providing you money for car repairs as the result of an accident, auto insurance can provide you with protection from liability. Liability is money you owe to someone because your actions caused them harm, and you're at-fault. For example, if you hit a cyclist with your car, your liability would include their resulting medical bills, which could be in the hundreds of thousands of dollars.




Without the right liability car insurance, you could have your wages garnished, or you could be forced to liquidate your retirement accounts or sell your house to pay their medical bills. With liability car insurance, your insurance company would pay. So while paying for auto insurance can be annoying, it’s much better than losing your house or going bankrupt because of a mistake on the road.