Everyone having car might have come across the term insurance. Insurance is so vital that it covers all kind of damages caused to your car and by your car. But what really matter is that choosing a right insurance policy which may cover all your needs.

For this you should know the basics of auto insurance as well as the laws of your state so that you can plan your insurance. It will give a clear notion regarding what additional package you may require to cover the accident. Before opting for the car insurance, you have to consider several factors such as the amount of money you are willing to pay as premium and deductibles, the type of car you are having, your driving records etc.

Actually auto insurance is a package of several insurances. As per the rules of the state some may be compulsory and some may be optional.

There are several types of auto insurance. Each one is unique and you can pick the one which suit your needs. So it is up to you to choose the type of insurance policy. Let us see some of the types of insurance which are commonly issued by the insurance companies.

Compulsory Third Party /Liability Insurance - As per the law you should compulsorily have a third Party Insurance. This type of insurance covers the treatment cost when you injure a third person or repair cost when you damage others property. It will also cover the court expenses. Once when the liability of others is satisfied, then it is up to you to choose the type of coverage for the loss met by you. Keep in mind that third party insurance is a must and the coverage for you is an optional.

Collision insurance – This type of insurance covers those damages occurred to your car when it is collided with another vehicle or object

Fully Comprehensive car insurance – A comprehensive insurance covers your car from all kinds of risks such as collision, fire accident, vandalism, burglary, natural calamities etc. However this may be a costly option when compared with other policies.

Medical Insurance Policy – This kind of insurance policy covers the treatment cost for the driver as well as the third persons regardless of fault.

Insurance against uninsured or under insured drivers - When you are insured under this policy, you can claim for the damages caused by an uninsured or under insured drivers to your car. In simple terms, even though when a third person causing damages to your car doesn’t have liability insurance or having only insufficient liability insurance, you can claim for insurance coverage under this policy.

Third Party, Fire and Theft insurance - This type of insurance is especially meant for car owners who had completed their car loan but still have passion and sentiments towards their car. It is somewhat similar to a comprehensive insurance package

How to pick the right kind of auto insurance?

Since your state requires only a minimum amount of insurance it really doesn’t mean that you have to go for the same. You can choose an insurance policy which has additional coverage to meet a variety of problems. Considering the following five factors will help you to pick the right kind of auto insurance.

Know about the laws of your state

The laws regarding insurance vary according to country as well as state especially if you are residing in US. So you have to consider this aspect while picking up auto insurance. It is your wish to purchase a superior insurance coverage but definitely you should have a minimum insurance policy as stated by the law.

Choice of alternatives

There are lots of options available in car insurance but picking the right one that suits your need really does the matter. The insurance which you have chosen should not make you to pay out of your pockets.

How much money you are willing to pay

If you are having only minimum liability coverage, and when you injure a third person then his legal representative has the right to go after your personal assets. So the little more you pay as premium, safer you are from such type of risks.

Kind of vehicle you own

If you own a costly car which has a worth of above $50000, then you should not show any hesitation to spend an extra $200 annually for comprehensive or collision insurance as you may not be able to replace the car when it met with major accidents. However if your car doesn’t even worth $2,000, then it is smart not to go for comprehensive and collision coverage.

Know about your other insurance

Most of the people are not aware that other kinds of insurance such as health insurance and homeowners insurance can also meet the damages when you met with a car accident. Seek the advice of experts to avoid the purchase of unnecessary coverage if you are already having others.

Thus auto insurance is nothing but a proportion which relates the amount which you are willing to pay from your hand in respect to the amount you want the insurance company to cover.