Auto Insurance 101: An Introduction to the Basics

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Auto insurance is both legally mandated and a practical necessity. However, budgeting for life’s essentials can be a challenge in today’s economy. Usually, you can still find an insurance plan that meets your coverage needs and doesn’t break the bank. This guide should help understand what types of protection are available, to choose an affordable indemnity product that shields you against major losses.

Basic Coverage Options

According to the North Carolina Division of Motor Vehicles, you must keep current liability insurance on your vehicle if you also have valid, active license plates. Along with coverage for uninsured and underinsured motorists, the state also mandates some minimum requirements for liability policies:

$30,000 for bodily injury to one person

$60,000 for bodily injury on two or more people

$25,000 for property damage

If you have an outstanding vehicle loan, your lender will likely insist that you also carry comprehensive and collision insurance. As Investopedia explains, this is because your car, truck or van still technically belongs to the bank. Collision reimburses you for automobile repairs resulting from an accident, while comprehensive pays for incidents related to fire, theft, vandalism, weather damage and so forth.

Auto on the street.
Photo by Lance Anderson on Unsplash

Add-On Options for Your Policy

Besides whatever essentials you need, Charlotte local insurance agents will often recommend other options that can save you time, money and hassle. Towing coverage is important if you don’t already have it with a roadside assistance program from the auto manufacturer. Rental is also a useful addition to your policy, as it can save you money should you need a loaner vehicle during repairs. Furthermore, you’ll need uninsured or underinsured motorist protection to not only keep you legal but also safeguard your finances.

While towing and rental are just a couple of standard policy options, it’s worth checking into other helpful options to include in your total auto indemnity solution. Gap insurance is frequently recommended to vehicle leasers, and it reimburses you for the difference between your auto’s blue book value and the amount you still owe on the loan. Also, coverage for medical payments and personal injury can protect you in the case of exorbitant medical bills from a vehicle accident.

What Kind of Insurance Do You Need?

Insurance policies are highly customizable, but many agencies have a menu of options they usually select from to meet their clients’ needs. If you’re making payments on a loan, you’ll automatically require liability, comprehensive and collision. Most benefit from the inclusion of rental and towing products as well.

Additionally, you can reap the rewards of discounts if you’re either insuring multiple vehicles or you want to add on insurance for a home or apartment. While multi-product savings are pretty common, don’t forget to ask about other types of discounts such as good student, low mileage, hybrid vehicles or for members of the Armed Forces.

A tight budget can present unique challenges in getting insurance that best suits your situation, but don’t be discouraged. Keep in mind that deductibles are adjustable, so you can scale upwards to lower your monthly premiums. Keep in mind that this may translate to more money to pay towards repairs in case of a claim. You’ll have to weigh the pros and cons of this adjustment, so be sure to consult with your insurance agent for advice.

You Have Plenty of Choices

Your financial situation, driving habits and other lifestyle factors will dictate the best insurance package for your automobile. It’s helpful to do your homework and have a clear understanding of North Carolina auto insurance guidelines and what your budget can handle. When visiting your agent, make sure you ask plenty of questions and be willing to explore all available options.

Anne Lawson is a British writer who keeps her eye on business and trending issues that affect us all. She loves to delve into the real story and give us interesting tidbits we might otherwise miss.