Ever since you started driving, you likely had auto insurance. Like most people, you probably pay for this insurance to protect your interests in the event of a car accident you cause or another person causes.
According to the Insurance Information Institute, people in the U.S. spent an average of $1056.55 on car insurance in 2018. Knowing certain terms about your auto insurance policy can benefit you in case you ever have to file a claim.
This is the predetermined amount your insurer will require you to pay if you make an auto insurance claim. In most cases, choosing a higher deductible means you will pay a lower premium, but your insurer will pay you less if you do end up filing a claim.
2. Liability insurance
If you cause a car accident and you have liability insurance, this coverage will pay for the other party’s medical expenses. If that person sues you, your liability insurance can also pay for any legal fees you incur.
3. Collision coverage
Most auto loans require you to have collision coverage at the very minimum. If you experience a one-car accident, like if you hit a tree or a run into a pole, for example, this coverage will pay for the repairs.
It is a good idea to review your auto insurance policy to understand the details of your coverage. This way, you can feel more prepared if you get into an accident and need to file an insurance claim to recoup any damages.