Anytime you are purchasing a car, whether it is new or used, you are required by law to purchase car insurance. The legal term for this contract is typically known as a policy. It offers certain levels of protective coverage in case there is an accident. This is designed to limit the owner of the car from being sued in case there is an accident or incident. Typically, it offers limited protection to the passengers or other people who come in contact with the vehicle during the course of an accident or incident besides the owner.
Each state has its own laws regarding the amount of coverage you are legally required to carry for comprehensive, collision, or bodily injury car insurance. If there is a loan on the car, then you are usually required to carry both comprehensive and collision coverage. This is required to repair or replace the car if it is involved in an accident and is designed to protect the person who holds the loan on the car.
The higher the deductible is for the comprehensive and collision coverage, the cheaper the rates typically will be for the policy. For example, this means if a window is broken the policy holder may have to pay a $500.00 deductible before the insurance company will pay anything to replace the window. This may make an owner more careful because he knows he is responsible for any deductible before the policy coverage begins.
However, if cash was paid for the car, normally an owner can get by with having what is known as liability insurance only. This type of insurance is the cheapest for a person to carry. It still offers basic protection to the owner against being sued in the event of an accident. This essentially means if there is an accident and the owner is at fault, the insurance company will cover damages to the other person’s car. However, the owner is normally responsible for repairing his own car.
Car insurance policies typically do not cover a person who is found to be under the influence of drugs, alcohol, or while committing a crime. A person cannot crash his car deliberately to get out of paying off a car loan by collecting the insurance. This is considered to be fraud and is punishable by jail time.
Some car insurance policies have options such as towing and paying for a rental while a car is being repaired. It pays to check out all of the options that are available and then decide what it is possible to afford. To get the best deal on a car insurance policy, contact several companies and compare rates.