Generally, when looking to insure our vehicle, the most common questions we ask ourselves are how much does auto insurance cost? or where can I get cheaper auto insurance? However, the first thing we must know is what auto insurance is , its coverage and the types of auto insurance that are available before knowing how much to invest in insurance.
Auto insurance is a contract between the owner of a vehicle and an insurer whose objective is to financially cover the risks associated with driving and owning the vehicle.
Let’s learn more about the characteristics of auto insurance, what types of auto insurance are on the market and what they cover.
What does auto insurance protect?
Auto insurance protects (i) people : those who go inside the vehicle and those who are affected by an action thereof; (ii) to the vehicle : protects the damages that the car may suffer, as a result of an accident or a loss, as well as the theft of the car; and (iii) third party assets : it also protects third party assets that are affected by the vehicle due to an accident or loss.
The characteristics of a car insurance
Auto insurance, although it can vary in the details, have in common certain characteristics that can be easily identified, among them we have:
- The type of coverage : As we will see in the next section, you have the option of choosing which type of coverage to choose. Civil liability is mandatory, so it is the minimum you must acquire, but this will not cover important additional costs at the time of an accident. See the next section to learn more about the different options.
- The initial costs : this is where the deductible comes into play, which is the initial payment you make before the insurance company pays for the damages. You can pay a lower deductible but, at the same time, the premium (that is, what you pay) will be higher.
- The maximum payment : this is the total value that your policy will cover, that is, if the damages caused by an accident in which your vehicle has been involved are equivalent to 500 thousand pesos and your policy has a cap of 400 thousand, 100 pesos an additional thousand will be at your expense.
- The claim terms : this is the procedure that you must take into account to make the request to the insurer so that they make the disbursement of the money. You should be very clear about your insurer’s policies, as you may only be able to apply within a specific period after the accident.