What Does Car Insurance Cover?

What Does Car Insurance Cover?

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Owning and driving a car involves several financial obligations. First, there's paying the sales price, either through financing or by paying upfront. As many do, you'll need to keep up on monthly payments to retain possession if you decide to finance.

Then you have the cost of fuel to transport you where you need to go and maintenance to keep your car running at its best. Using the correct grade of gasoline and performing regular work like oil changes and factory recommended service ensure your vehicle not only runs great but does so year after year. 

Each month, you can financially plan as you await paying them. Because these costs are a part of your regular budget, you know how much money to set aside, so you have the funds for other necessities. 

But what about unexpected car-related expenses? What if another driver collides with yours out of nowhere and causes thousands of dollars in damage? And what if this damage not only involves your car but physical injuries that require medical care?

That's where car insurance comes in and assists you with unforeseen costs. Like a financial safety net, car insurance saves you from severe financial strain when you face the monetary challenges involved with auto accidents.

What does car insurance cover? Let's look at the details to inform you before picking a policy.

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How does car insurance work?

Car insurance protects you and your vehicle from unforeseen expenses related to vehicle repairs and or medical treatment. Typically, these costs arise from traffic accidents and include events beyond your control, like weather events or theft.

Drivers take out a car insurance policy with the carrier of their choice, choosing the specific coverage they like, which fits their financial situation. 

When a driver is involved in a traffic collision or other situation requiring car repairs or treatment for injuries, car insurance saves them from monetary strain by covering those costs. 

You can pay car insurance premiums in total yearly or via monthly installments. Usually, a discount applies for those who pay their annual premium in its entirety. 

Though car insurance plans cover the majority of unforeseen repair and medical expenses, the driver is responsible for paying a deductible before benefits kick in. That amount is usually $250, $500, or $1,000.

With all of the financial responsibilities involved in owning a car, wouldn't it be nice knowing you're paying the lowest rate on financing? Shift works with a network of trusted lenders who compete for your business, so you get the best rate no matter what. Whether you're after a used car, truck, van, or SUV, Shift finds you the financing you need.

What does auto insurance cover?

Auto insurance policies aren't as simple as carriers reimbursing you for unpredictable repairs or medical costs. Car insurance policies involve several facets that determine specific coverage.  

Depending on which plan a driver chooses, a particular auto insurance policy may have all or some of each. Attached to each coverage area is a financial benefit limit. 

Collision coverage pays repairs for traffic accidents, no matter who's at fault.

Medical payments coverage (MedPay) reimburses you and your passengers after an accident, regardless of fault. 

Comprehensive coverage covers vehicle damage from events like hail storms, theft, or vandalism. 

Liability coverage pays medical and property damage costs from an accident where you're at fault.

Uninsured motorist coverage compensates you in the event of an accident with an uninsured driver. 

Underinsured motorist coverage is for situations when you're involved in an accident with an underinsured driver. Once the underinsured driver's insurance reaches its limit, this insurance pays everything beyond that. 

Gap insurance covers the remaining payments on your vehicle when it suffers irreparable damage, also known as "being totaled."

Is car insurance required?

Unless you live in Virginia or New Hampshire, yes, the law requires you to have car insurance. Coverage requirements vary from state to state, so it's important to know yours before deciding on a policy.

Not having auto insurance in one of the states that require it can lead to legal penalties that put a significant dent in your wallet. 

Of the states that ask drivers to have auto insurance, there are three main types of coverage usually required: 

  • Medical payments coverage (MedPay)
  • Underinsured or uninsured motorist coverage
  • Liability insurance

An essential aspect of staying safe while driving is owning a vehicle in excellent condition. After all, you need a car that brakes and handles well, along with fully functional safety features. At Shift, certified mechanics perform 150-point inspections on every vehicle sold, along with a free Carfax report, so you know you're buying a quality car in excellent condition.

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Understanding car insurance deductibles

Though car insurance protects you from spending many thousands of dollars in the event of an accident, you're still responsible for a deductible payment before being reimbursed.

Lower deductibles come with higher premium payments. Conversely, higher deductibles lessen your premium. Deciding on which deductible is right for you involves many factors, such as your willingness to accept risks or how often you drive and where. 

Typical deductible amounts are $250, $500, and $1000, though $2,000 is also possible. 

If you're in an accident and another driver is at fault, your deductible doesn't apply. But if you cause an accident, you'll have to pay your deductible before receiving benefits. You're also responsible for a deductible when you need to use your comprehensive coverage for events like weather or theft.

You can tailor specific aspects of your insurance policy, like collision or comprehensive, to have unique deductible amounts to best meet your needs.

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Car insurance coverage in summary

Car insurance provides essential financial protection in the event of an accident or unpredictable vehicle damage. And it covers not only you and your vehicle but also your passengers and others who may be involved in a collision. 

With so many hazards present on roads and highways, car insurance gives you peace of mind so that you can enjoy the drive. 

And though different coverage areas offer varying levels of protection, even a basic car insurance policy is better than none at all. Researching various insurance carriers and what they offer in terms of plans and pricing, you'll be able to decide better which one works for you.

When you're on the market for a used car and need something in excellent condition that keeps you safe, look to Shift. In addition to selling fully inspected vehicles, Shift offers fair, no-haggle prices driven by powerful machine learning algorithms and tons of data. 

Whether you want a Chevy Tahoe, a Cadillac Escalade, or any of the hundreds of other makes and models in Shift's inventory, you can browse and buy from the comfort of your own home via Shift's easy-to-use website. And Shift will deliver the car to your door in a matter of days. And, if you live in one of Shift's many service areas, a concierge will even bring the car to you for a commitmentless test drive before you sign the papers.

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Shift Editorial Team