Understanding Auto Insurance Basics

 

Whether you drive the Latest vehicle or an older model, you want to make sure you’re protected in case of an accident. To protect yourself, it’s important to understand auto insurance basics, how it works, and who the coverage protects. But before we dive into this, let's talk about some basic insurance terms.

What is Auto Insurance

Auto insurance is coverage procured by car owners to ease the costs of getting into a car accident. Instead of footing the bill out of your pocket when accidents happen, you pay annual premiums to an insurer. The insurer then pays most or all the bills when there is an accident or damage to your vehicle.

Auto Insurance Terms Explained

Deductible

This portion of the damages you'll have to pay out of your pocket before your coverage kicks in. Let's say you have a minor automobile accident, and the cost of repairs is RM1000. If your deductible is RM300, this means you will have to pay RM300 from your purse, and the insurance company would cover the outstanding RM700.

Auto Insurance Premium

This money is the one you pay for your insurance policy. Depending on your insurer, you may pay once-a-month, quarterly, bi-annually, or even yearly. Car insurance premiums vary. Mostly basing factors such as your deductible, your age, driving history, the make, model, and age of your car, as well as the type of insurance you bought.

Coverage Limit

This is the maximum amount of insurance policy you purchase. Subject to the terms and conditions of the auto insurance policy, this figure is also the maximum amount your insurer will pay for a particular loss or damages. Remember, each policy is unique and may include a variety of limits, so if you exceed your policy’s limits, you’ll be liable for any outstanding costs. Work with fincrew.my one of the best insurance service providers in Malaysia, to ensure you have the maximum coverage.

How Car Insurance Works

When you pay a premium for an auto insurance policy, the insurance company agrees to pay for your losses according to the type of policy you purchase. The policy coverages include:

• Property – damage to or loss of your vehicle

• Liability – legal responsibility to third parties for bodily injury or property damage or loss.

• Medical – expenses of nursing injuries, recovery, and sometimes, lost wages and funeral expenses

Coverages are valued separately to let you customize policy amounts to suit your exact needs and budget. Policy terms are usually renewable annually or sometimes at six months intervals. Your insurance company will notify you when it’s time to renew your policy and pay for another premium.

Who Does Your Car Insurance Policy Protect?

Your auto insurance policy will protect you and your other family members on policy whether driving your car or someone else’s car with their permission. Your coverage also protects someone who is not on your policy and drives your car with your consent. You should note that your auto insurance policy only covers personal driving, and the policy will not protect you if you use your car for commercial purposes. 

Final Thought

Although other insurance types such as life and health may seem more important, having an auto insurance policy can save you a ton of money and stress in the long run if you own a vehicle.