Auto insurance is a category of insurance extended to automobile (car, trucks etc) owners and basically extends coverage for all risks involved in owning and/or driving an automobile. This can be an accident, damage to property or caused by property, damage caused by other automobiles, loss of passengers, and nor forgetting damage to the car itself.

Optional Covers

Depending on the kind of risk you want covered, you will get different levels of coverage. For example, you might opt to have coverage for vehicle repair or replacement in the event of an accident or in case your vehicle is stolen and damaged beyond repairable means. All these are known as optional covers.

Liability Insurance is a mandatory cover for all car owners and will offer coverage for risks of claims against you the car owner incase your car damaged another person’s property, another person’s vehicle and medical expenses for all third parties involved in the event of an accident that you’re at fault. A comprehensive insurance on the other hand covers all risks incurred, including medical care for you and repair or replacement for your own automobile.

GAP Insurance

Arguably though, it’s believed that even the comprehensive insurance doesn’t cover all risks because of the mere fact that when you purchase a new car, the price drops down immediately as it is no longer valued as new. This is to say that if your car got damaged one day after purchasing it, your insurer is highly likely to assess the total value of the vehicle as something less than the amount of purchase, regardless of the fact that you may still have a good deal more than in financing and payments.

It’s because of this that GAP insurance was formulated. GAP insurance covers the difference in the total car value and the amount that you still owe in terms of payments. The car industry’s car hire and leasing businesses have also led to GAP insurance becoming more critical.

Extra Cover

In the United States of America, an insurance policy will cover the car owner and all others who drive the insured car on condition they don’t live on the same address. If you have someone living in your address and want them covered, you’ll be expected to pay an extra fee for them to be added and get recognized on the policy. This is to say that in the event of an accident while driving another person’s car with their permission, their policy and not yours will cover you. However, if you don’t own a vehicle personally but drive another person’s car, your coverage in the event of a crash will fall under the non-owner policies.