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Car insurance estimate: how much do you need?

Every car buyer goes through a checklist before buying his or her brand new car. The most important aspect of the list is the car insurance and the car insurance estimate. Car insurance is a protection for your car as a whole. Your insurance advisor can offer you a varied range of car insurance policies, depending on the type of vehicle you own, the number of coverages you need and the number of years you want to be insured, in exchange for an annual amount called the insurance premium.

When you are in a car accident, the cost of damage that the car bears is covered by the car insurance policy you choose, however this does not include damage incurred in excess of the total amount of the car insurance. The value of your car insurance is calculated by the IDV or the insured value of your vehicle; the IDV is the maximum amount the insurance company will pay for the damage your car incurs. The amount of IDV is approximately equal to the actual market price of the car you own or the showroom price of your car. Thus, the IDV is not a constant value and changes periodically. If you renew your car insurance after one year, the value of IDV will decrease after one year due to the amount of depreciation charged on it.

What damage is covered by car insurance?

The car insurance does not cover all damage to your car during the term of the insurance. Covers in the US are usually seen in a cluster of three numbers separated by a dash, for example 20/50/30 or 100/500/100. The first two numbers are usually seen for medical coverage. For 100/500/100, the insurance company pays $100,000 per person up to $500,000 combined for all people. The last number covers damage to property i.e. any other vehicle or property you have been involved in an accident.

Comprehensive car insurance mainly covers the following types of damage:

  • Liability coverage:

Also commonly known as accident insurance, the coverage mainly covers bodily injury and property damage, ie damage to your car. However, the amount of insurance will vary from one jurisdiction to another. The insured may also increase the amount of insurance cover (before the loss) to cover any damage incurred during the accident.

In the unlikely event that you hit a telephone pole with your car. In such a case, the liability coverage will cover the cost of the damage to the post. However, it does not cover other costs related to the damage caused, such as interruption of services claimed by the telephone company.

Physical cover covers the insured against possible injury during the accident and covers him or her against any damage caused by third parties as a result of an accident. The cover covers the legal costs and the damage for which the insured is sued.

  • Full coverage

Full coverage covers both collisions and extensive damage to your vehicle. Collision coverage covers the vehicle involved in a collision by paying for the repair of the damage incurred or by paying the cash value of the vehicle if the vehicle cannot be repaired.

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Comprehensive coverage covers the vehicle against damage not normally considered collision damage. The damage covered by this cover is damage caused by theft, vandalism or contact with animals. In addition, many insurance companies also include ‘Act of God’ damage, i.e. any damage caused by an event or events caused by factors beyond human control such as cyclones, tornado, tsunami etc.

In addition to the main coverages listed above, insurance companies in the US also offer the following coverages:

  • Damage caused by an uninsured/underinsured motorist (UM/UIM)

  • Loss of use

  • GAP coverages.

  • Lease/loan repayment.

  • Coverage of roadside assistance services.

  • Mechanical Failure Coverage

  • Coverage of custom parts and equipment.

How can you calculate a car insurance estimate?

You can follow these simple steps to get the correct auto insurance estimate:

  • Before buying a car, narrow down your choices.

  • Determine the amount of coverage you would ideally need. When you buy a new car, you need to get insurance that also covers collisions and extensive damage. However, this is not mandatory for a used car.

  • Compare your car insurance policies. Different companies will have different insurance costs for your vehicle, depending on the type and market price of the model. By comparing the quotes, you can find the best insurance for your car.

  • Make the final choice based on the comparison table.

What should be your ideal car insurance policy?

There are many factors that affect your car insurance estimate. Ideally, you should choose a plan and amount that will cover the most possible damage your car can sustain over its lifetime. The amount of insurance you choose should typically exceed the actual cost of your total car.

The final auto insurance estimate will ultimately depend on your own choices and individual situation. It is always advisable after calculating the auto insurance estimate to look at a wide range of options and companies that offer auto insurance. Comparing insurance quotes and what they cover together will help ensure you get the most out of your auto insurance policy.