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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 car insurance and car insurance estimate. Auto insurance acts as a protection for your car as a whole. Your insurance agent can offer you a variety of auto insurance options, depending on the type of vehicle you own, the amount of coverage you need and the number of years for which you wish to have the protection, in exchange for an annual fee known as the insurance premium.
When you get into a car accident, the cost of damage to the car will be covered by the car insurance policy you choose, but it will not include damage above the total amount of the car insurance policy. The value of your auto insurance estimate is calculated by the IDV or Insured Declared Value of your vehicle; the IDV is the maximum amount the insurance company will pay for the damage your car sustains. The amount of IDV is approximately equal to the actual market price of the car you own or the showroom price of your car. So the IDV is not a constant value and keeps changing periodically. When you renew your auto insurance after a year, the value of the IDV will decrease after a year due to the amount of depreciation charged on it.
What damage is covered by car insurance?
Auto insurance does not cover all damage to your car during the term of the insurance. Coverages 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 digits are usually seen for medical coverage. For 100/500/100, the insurance company’s policy pays $100,000 per person up to $500,000 combined for all people. The last issue covers property damage, meaning any other vehicle or property that you hit in an accident.
Comprehensive car insurance mainly covers the following types of damage:
- Liability coverage:
The coverage, also commonly known as accident insurance, mainly covers bodily injury and property damage, i.e. damage to your car. However, the amount of insurance will vary from one jurisdiction to another. The insured is also allowed to increase the amount of insurance cover (before the accident) to cover any damage that occurred during the accident.
If your car hits a telephone pole due to an unfortunate circumstance. In that case, the liability coverage covers the costs 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.
Bodily cover covers the insured against possible injury during the accident and also covers him or her against third party damage caused by an accident. The cover covers the legal costs and damage for which the insured is summoned.
- Full coverage
Full coverage covers both collision and extensive damage to your vehicle. Collision coverage covers the vehicle involved in collisions, either by paying for the repair of the damage incurred or by paying the cash value of the vehicle in the event that the vehicle cannot be repaired.
Comprehensive coverage covers the vehicle against damage that would not normally be considered collision damage. The damage covered by this cover is damage due to theft, vandalism or collision with animals. In addition, many insurance companies also include ‘Act of God’ damage, which is any damage caused by event or events caused by factors beyond human control such as cyclones, tornadoes, tsunami etc.
In addition to the main coverages listed above, insurance companies in the US also provide the following coverage:
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Damage caused by uninsured/underinsured motorist (UM/UIM)
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Loss of use
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GAP coverages.
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Lease/loan redemption.
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Roadside assistance coverage.
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Coverage mechanical breakdown
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Coverage of custom parts and equipment.
How do you calculate a car insurance estimate?
You can follow these simple steps to get your auto insurance estimate correct:
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Narrow your choices before buying a car.
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Determine the amount of coverage you would ideally need. When you buy a new car, you should choose an insurance policy that also covers collisions and extensive damage. However, this is not mandatory in the case of a used car.
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Compare insurance quotes for your vehicle. Different carriers have different insurance costs for your vehicle, depending on the type and market price of the model. By comparing the quotes, you can limit yourself to the best insurance for your car.
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Make the final choice based on the comparison table.
What Should Your Ideal Auto Insurance Estimate Be?
There are many factors that affect your car insurance estimate. Ideally, you should choose a plan and amount that will cover most of the potential damage your car could sustain over its lifetime. The amount of insurance you choose should generally be higher than the actual cost of your overall car.
The final car insurance estimate ultimately depends on your own choices and individual situation. It is always advisable after calculating the car insurance estimate to look at a wide variety of options and companies that offer car insurance. Comparing insurance quotes and what they cover will help ensure you get the most out of your auto insurance policy.
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