Types of car insurance policies
Choosing your car insurance is a difficult decision. It is not enough to know which is the cheapest or who has the best sales pitch. The important thing is to be aware of the responsibilities or coverage that car insurance policies have for you and choose the one that really suits you.
By knowing the details of what each coverage includes, for example, you can determine the best option, remember that the most expensive and complete may not be what you need; for example, if you have an old car, maybe hiring a limited coverage is the most appropriate for your vehicle. You must be very meticulous when it comes to see what suits you and what does not, according to your needs and the risks you are exposed to.
What exactly is a car insurance?
Auto insurance is a contract that obligates an insurance company to cover the total or partial cost generated by an incident involving the insured car, in exchange for a monthly amount (which can be covered annually, semi-annually, quarterly and in some cases monthly) paid by the client. This contract is known as a policy.
Once you take out an auto insurance policy, it is the insurer’s responsibility to assist, protect and settle any claims you may have while using your car, as long as they are specified in the policy. It is of utmost importance to know the exceptions to your insurance protection, especially in cases of emergencies and accidents.
What does an auto insurance policy cover?
Depending on the type of coverage you take out, the auto insurance will absorb the expenses in case of an accident, theft and/or other unforeseen events. The classification of coverages vary according to the different events or accidents in which you are protected in case they occur. The different coverages may include from the payment of damages or partial theft of your car (mirrors, rims, etc.) to the broad and total coverage of the vehicle(s) involved in the accident.
Obviously, the coverage has an impact on the price, the more protected you are, the more expensive the policy is.
The main concepts that are usually included in the coverage of a car insurance policy are:
Property damage
Total theft of the car and/or auto parts.
Medical expenses
Legal defense
The most basic packages only cover civil liability, while the most complete ones back you up for almost anything that happens to your car, including natural disasters.
Keep in mind that, normally, an auto insurance does not pay absolutely all the expenses, but a large part that depends on the commercial value of your car. The remaining amount, known as the deductible, must be paid by you.
Types of car insurance coverage
Remember that all insurers have different terms, but in general, they all offer the following coverages.
1 Liability Coverage
Liability insurance is the most basic auto insurance that exists and covers you for any third party claim. That is to say, if you are involved in an accident and the other person demands compensation for damages, this coverage backs you up.
Liability insurance does not cover damages to your vehicle or total theft, remember that in Mexico, it is mandatory to have at least this auto insurance to drive on highways and in some states.
2 Comprehensive Coverage
The broad coverage of an auto insurance policy covers physical damages, total or partial, to the car and the people in the vehicles involved in the accident. This coverage also provides protection for total or partial theft of the car, covers medical expenses of the owner and passengers in an accident, in addition to assistance services such as towing, gasoline, road or mechanical assistance and legal advice.
3 Limited Coverage
Limited coverage auto insurance offers protection in case of car theft and damages to third parties due to an automobile accident. However, it does not cover the expenses of the insured car. The difference between this coverage and the comprehensive coverage is that this one does not cover you for claims for which you are responsible. This coverage is in charge of insuring you in case of total theft of your vehicle, civil liability, medical expenses, legal assistance and road assistance.
#4 Other insurance
Insurance per mileage. In USA there are few companies that are just starting to use this type of insurance. This insurance includes the same coverage as traditional insurance, but you pay in proportion to the mileage used, thanks to a device that connects to the vehicle’s computer. In addition to the distances traveled, data is collected on the car’s usage habits. The insurer obtains the data at the exact moment of a crash for post-crash procedures.
