A Beginner’s Guide to Car Insurance

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Coin stack with model cars/ Image Credit: kanchanachitkhamma

The older you get, the more it will make sense to have insurance for everything. From your phone to your car, having an insurance policy ultimately means paying less money if and when an accident happens, and repairs are needed. Navigating car insurance can be difficult and confusing, especially for first-time drivers. That’s why understanding the various policies and terms is essential before you find the plan that works best for you.

What Is Car Insurance?

The function of insurance is to cover you in case of an accident. An insurance policy that you pay for each month shares out risk among a large group of people. Not all of them will have an accident or need to draw on their insurance. Others will get in large accidents or several accidents and will end up “withdrawing” far more from the policy than they ever put into it.

Not having insurance means that you run the risk of getting into an accident that will cost thousands of dollars you simply don’t have. In worst-case scenarios, you could be looking at replacing your own car and someone else’s, paying medical bills, and repairing damaged property, all out of pocket.

Plus, in most states, it’s illegal to drive without car insurance, so you literally need to have insurance.

Keywords and Concepts

There are a few buzz words you will need to know so you can understand what to look for in a policy.

Claim: A request for payment under the terms of your insurance policy.

Deductible: The out-of-pocket cost you will need to pay before your provider will cover the cost of your repairs.

Premium: The amount you will pay each month to keep your insurance policy active.

Risk: The probability of a particular loss occurring.

Total Loss: When the damage to a vehicle is so severe, it would cost more to repair than the vehicle is worth.

Types of Coverage

The types of insurance you purchase depends on what you want or need covered under your policy. Some companies even offer GPS-based insurance that charges you based on the usage of your vehicle. These are the main coverage options you’ll encounter during your search for the right policy.

Liability: The most common (and usually mandatory) coverage. This covers bodily injury, property damage, or both.

Comprehensive and Collision: This option will cover you in the case of theft, vandalism, or other perils like fire or extreme weather. The collision portion will cover your costs in the event of an at-fault accident.

Personal Injury Protection (PIP): This policy pays for medical expenses and lost wages related to an accident, regardless of who caused it.It can also cover health insurance deductibles and funeral services.

Uninsured/Underinsured Motorist: In the event that you are in an accident where the other driver is uninsured or has limited coverage, this will cover your medical fees, any lost wages, and damage to your vehicle.

Cost of Insurance

There are a lot of factors that go into determining how much your car insurance will cost each month, such as your age, the state you live in, your driving history, and the coverage you choose. Which age group you fall under is one of the most impactful factors for new drivers, especially young people.

Experienced drivers who have a good driving history may have lower premiums. For young drivers, however, no experience means that drivers are in a higher risk category, which can raise premiums for several years. If you have a history of smaller accidents, you can expect your premium to stay high until your provider decides you are no longer high risk. Because of this, we suggest you keep an eye out for safe driver benefits when shopping around for new insurance.

Whether your state mandates it or not, we strongly encourage having car insurance, for the protection of you and your family against financial loss. Which provider you buy from ultimately depends on what you want out of your policy. You must weigh how much you want to pay against what quality of service you need. Once you’ve purchased your new car through BestRide, we hope this breakdown will guide you towards the insurance policy that works best for you!