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Car Loan
Car Insurance
Old & New Car
Buyer's Guide
Car Care |
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Basics of Car Insurance
Congratulations! You have already your dream car. But before you go out on the
road and have an exiting drive, you have to insure you car first. But do you
know what is car insurance?
Auto insurance is a type of insurance that consumers can purchase for truck,
cars and other vehicles. It provides protection against losses incurred.
Depending on the type of coverage purchased, buying an auto insurance can
protect you against the cost of repairing the vehicle following an accident. The
cost of purchasing a new vehicle if it is stolen or damaged beyond economic
repair and to the legal liability claims against the driver or owner of the
vehicle following the vehicle causing damage or injury to a third party.
The risk associated in buying a new car is not fully covered by a comprehensive
insurance. There is generally a period in which the remaining car payments
exceed the compensation the insurer will pay for a destroyed vehicle, due to the
sharp decline in value immediately following purchase. To protect the consumer
on the market, GAP insurance was established in the early 1980’s. GAP protection
was developed because of the escalating price of cars, extended term auto loans,
and the increasing popularity of leasing.
Liability insurance covers claims against the policyholder and generally, any
other operator of the insured vehicle, provided they do not live at the same
address as the policyholder and are not specifically excluded on the policy.
Those living at the same address must specifically be covered on the policy.
Generally, liability insurance does not protect the policyholder if they operate
any vehicles other than their own. You are just covered by another party’s
policy if you drive a vehicle owned by that party.
Liability coverage also extended when you rent a car. But in most cases,
comprehensive policies or full coverage may not be applied. It is because the
insurance company does not want to assume responsibility for a claim greater
than the value of the insured’s vehicle, assuming that a rental car may be worth
more than the insured’s vehicle. But some states, it extends to rental cars.
Most rental car companies offer car insurance to cover damages to the rental
vehicle. In some regions, the “Loss of Use” or the costs associated with not
having access to the vehicle is also covered.
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