Auto Insurance: A Practical Guide With Everything You Need To Know

by Lisa Baker

The practical information in this guide covers the importance of car insurance, the difference between coverage policies, and even tips on how to select an auto insurance that best fits your pocket and your needs.

Having auto insurance means being responsible to yourself, your loved ones, and to the society in which we live. It is more than complying with the law, it is having the confidence that you are prevented in the event of a car accident, whether caused by you or someone else. 

Remember that if you drive, you must have auto insurance that meets the minimum coverage required by the law of the state where you live. Check out our guide, and meet with your insurance agent to help protect your property and person in the event of a car accident. 

The importance of car insurance 

The consequences of driving without insurance pose too many risks and should not be ignored. These could include: 

  1. Expensive traffic tickets; 
  2. Loss of your driver’s license; 
  3. Have your car impounded or impounded by the police; Y, 
  4. In the event of an accident it could cost you even your freedom. 

Plain and simple, if you drive you need to have auto insurance. Still, some people decide that having car insurance is too expensive, or they think they might not qualify for one, but it is not! 

There are insurance agencies that offer auto insurance policies that: 

  • They stick to your pocket and your needs;
  • They only ask for a photo ID and the details of the car to be insured. 

Did you know that in 48 of the 50 states of the American Union it is required by law to have car insurance to drive? But having auto insurance is more than complying with the law; it means safety, security, and peace of mind for you and your loved ones. 

What you need to know : DON’T TAKE A RISK. An auto insurance could offer you the security, protection and financial peace of mind in the event of an accident to repair the vehicle or receive medical attention, either for you, those people who travel in your vehicle, or for third parties in the event that you be responsible for the collision. 

Insurance policies and their functions

The first step in understanding an auto insurance policy is learning about the coverage and protection that each one offers. Some of these policies may be required by law and some others may be optional.

There are different types of auto insurance policies, and each one serves different functions. Here are two important categories of insurance policies:

1. Liability coverage policies

For damages and injuries to other people and their property in the event of an accident caused by you (this is the type of insurance that is required by the law of almost all states).

This coverage pays for bodily injury or property damage. Damages can include medical expenses and sometimes even loss of wages. Property damage includes property and automobile damage. This policy could also cover legal, court and court costs. State laws determine the minimum liability coverage you must have, but it is advisable to obtain more coverage than the state requires.

2. Collision and injury coverage policies on your car

For damage to your car and injuries incurred by you or your passengers in the event of an accident. In our surveys we have found that this is often the main reason why most of us want auto insurance.

Some examples of additional types of coverage you could include in your policy include:

  • “Uninsured Driver”: Pays for damages to your car in the event of a car accident caused by a driver who does not have liability insurance.
  • “Underinsured Driver”: Pays for damage to your car in the event of a car accident caused by a driver who has liability insurance that does not cover all expenses.

What you need to know:  The first step in selecting auto insurance is knowing the laws in your state. This will tell you what type of insurance you require or need to drive your car within the law. However, it is also good to keep in mind that it would be well worth protecting yourself with a broader coverage since, after all, no one wants to have thousands of dollars in debt due to not having enough coverage in their insurance policy.

Minimum coverage by state

The vast majority of states require you to have limited liability insurance (also known as third party damage coverage).

Surely when you meet with your insurance agent they will show you a series of numbers such as “20/40/10”, each representing thousands of dollars:

1. 20/40/10: The first figure refers to the limit of damages that the insurance will cover for personal injury expenses per person.

2. 20/40/10: The second figure refers to the limit of damages that the insurance will cover for expenses of bodily injuries due to accident in the event that there is more than one injured person.

3. 20/40/10: The third figure refers to the damage limit that the insurance will cover for property damage.

So, 20/40/10 means having coverage of up to US $ 20,000 per person injured in an accident, up to a maximum of US $ 40,000 per accident, and up to a maximum of US $ 10,000 of coverage for property damage.

What is the minimum requirement in your state? The law stipulates that the minimum coverage in the area of ​​civil liability insurance must include “Damage to third parties in bodily injury” and “Property damage to third parties”.

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