Purchasing a car can require a sizable financial investment that an owner should do everything he/she can to protect. Since permanently covering a car in bubble wrap seems impractical, an owner has little choice but to insure their vehicle against damage if they ever want to take it out of the garage. Car insurance provides protection to both the owner, and financial institution that backed the purchase of the vehicle, against any damage incurred to the vehicle. If you had to secure financing to purchase your automobile, the bank or credit agency that provided you the loan will probably require you to have full coverage auto insurance. This generally includes liability, collision and comprehension coverage.
Liability insurance, a requirement for driving in most states, will pay for any damage you inflict on someone else’s property when involved in a vehicular collision, while collision insurance will pay for any repairs needed to restore your car or pay you a fair market price for your vehicle if damaged beyond repair. Similar to collision, comprehensive insurance pays for any damage your car suffers from an unknown party or “act of God.” An “act of God” is considered any damage caused by a natural or unexpected event. For example, if a violent thunderstorm causes a branch to fall off a nearby tree and impale your windshield, comprehensive insurance would pay to have your windshield replaced. Hailstorms, tornadoes, floods, fires, hurricanes and elephant stampedes are other examples of unexpected events considered “acts of God.”
Comprehensive insurance also pays for any damage incurred by acts of vandalism, robbery or accident. Someone breaks into your car to steal your gym bag, radio or the pennies in your ashtray; comprehensive insurance would pay to have your window or stereo replaced. (Sadly, those pennies are gone forever.) Additionally, if someone keys “Riverdale High Rocks” (even though Central High is clearly the better school), into the hood of your car, or a run away grocery cart breaks out a headlight, comprehensive insurance will pay to have your car repainted and headlight replaced.
Before your insurance company will reimburse you for the damage suffered to your vehicle, you must first pay your insurance deductible. An insurance deductible is the amount of money you must first pay towards the repair of your vehicle prior to your insurance company covering the remaining amount. For example, if it costs $500 to replace your windshield, and you have a deductible of $250, you must first pay your $250 deductible before your insurance company will pay the remaining $250. If the cost of having your car repainted is $1,500, you would need to pay your $250 deductible before your insurance company would pay the remaining $1,250. The higher or lower the amount of your deductible will influence how much you pay each month in insurance premiums.