The vastness of auto insurance can be intimidating for people who are not aware of the ins and outs of car insurance coverage. But almost everyone has to drive a car at some point in their lives, and if you intend to buy a car now or later, it is important to have at least basic knowledge about car insurance policies. 

This article will describe in detail the basics of auto insurance. Right from the different types of auto insurance policies, and why they are needed, to the factors that affect auto insurance rates and how to make a claim. So let's get started. 

The Basics

Let's start with the basics. What are the different types of auto insurance policies, and why do you need them? 

Types of Auto Insurance Policies

Liability Coverage

The most important car insurance coverage is liability coverage. Except for the states of Virginia and New Hampshire, every other state in the US requires drivers to have a liability coverage policy to legally drive a car.

When you get in a car accident with another car, and the accident is your fault, then you are liable to pay for the medical treatments and repairs for the other driver. So your liability coverage can only be claimed by the other driver. 

Liability coverage has three components; Bodily injury per accident and bodily injury per person pay for the medical treatments while the third component, property damage is to covers the cost of the car and other property repairs needed due to the accident. 

The minimum coverage limit is the minimum amount your liability coverage must be able to pay in an accident. Each state has its minimum coverage limit, but it is better to have a coverage limit higher than what your state mandates to avoid being underinsured.

Collision Coverage

Collision coverage will pay for the costs of repairs to your car if it gets damaged in any collision accident. It does not matter if you collide with a car or a tree, if your car hits something and gets damaged, you can claim collision coverage. 

There are some conditions of course. The most important condition is that you must not be under the influence or else the insurance company will reject your claim and drop you from the policy.

Comprehensive Coverage

Comprehensive coverage is also called "parked car" insurance as it covers the cost of repairs for damages due to natural calamities such as earthquakes, floods, hailstorms, projectile damage, fires, etc. This policy will also reimburse you if your car gets stolen, or damaged due to riots, vandalism, animal attack, etc. 

Personal Injury Protection 

A personal injury protection plan works like medical insurance but specifically for the treatment needed in a car accident. While your medical insurance may cover road accident damages, a personal injury protection plan also covers lost wages. 

In most states, a personal injury protection plan is optional, but if you live in one of the twelve "no-fault" states, then it is mandatory to get one. This policy can be claimed irrespective of whose fault the accident was. 

Uninsured/Underinsured Motorist Coverage

With over 32 million drivers in the US driving uninsured, uninsured/underinsured motorist coverage is perhaps one of the most important optional coverages you can get. A UM/UIM policy can be claimed if the driver at fault either does not have liability coverage or has one but the coverage limit is not enough to cover the cost of the accident. 

Factors Affecting Auto Insurance 

Auto insurance rates fluctuate a lot. Depending on multiple factors, you might get low or high auto insurance rates. For example, the state you live in plays a very important role in deciding the price. If you want Expert advice on cheap car insurance in Texas or any other state for that matter, it is important to be familiar with the factors. 

Driving Record

When buying an auto insurance policy, your driving record is the most important factor in determining your car insurance rates. People with clean driving records get to pay the lowest prices since they are statistically less likely to be in a car accident. 

People with a poor driving record, with speeding tickets, points on their driver's license, rash driving, or DUI charges are charged the most for auto insurance policies since they are considered high-risk individuals. So if you want to save money on auto insurance policies, keep your driving record clean. 

Age, Gender, Location

Age, gender, and location also play a vital role in determining your auto insurance rates. People who are below the age of 25 are charged the most since most of the accidents in the US are caused by people in the age group 16 to 25. 

Men are more likely to be in a car accident than women according to statistics, hence, are charged more. Your locality also affects your auto insurance rates, especially the rates of comprehensive coverage. Theft rates, accident rates, labor costs, etc are some factors that come under location. 

Make and Model Your Car

Your car's make and model directly affect the rate of your auto insurance policy. Expensive, imported, luxury cars that cost more to repair or are more likely to get stolen will cost more to insure. Locally-made cars that can be fixed easily cost less to insure.

Insurance Claims

The moment you make an insurance claim (except liability insurance claims of others), your future insurance rates will increase. This is because you've been in an accident and are now a high-risk individual to the auto insurance company. 

How to Make a Claim

Making a claim is not a very complex or difficult process if everything is done properly. If you get in a car accident, the first thing to do is make sure if you or the other passengers are okay. Then contact the cops, and your insurance agent, and then exchange insurance information with the driver at fault. 

Then take pictures of the accident scene, along with both the cars. Make a video describing everything you remember about the car. Then make the claim. The insurance agent will ask for a few details and if everything works well, then your claim will be accepted.