What is Auto Insurance?
Auto Insurance covers for the loss or damage caused to the automobile or its parts due to natural and man-made calamities. Vehicle insurance (also known as auto insurance, car insurance, or motor insurance) is insurance purchased for cars, trucks, and other vehicles. … In the event of a car accident or damage, auto insurance will protect the owner from the expensive costs involved in fixing the car and other property.
There are basically 6 types of car insurance coverage:
Bodily Injury Liability
This coverage applies to injuries that you, the designated driver or the policyholder, cause to someone else. You and family members listed on the policy are also covered when driving someone else’s car with their permission. It is important to have enough liability insurance, because if you are involved in a serious accident, you may be sued for a large sum of money. Do consider purchasing an auto insurance policy that is more than the state-required minimum to protect assets such as your home and savings.
Medical Payments or Personal Injury Protection (PIP)
This coverage pays for the treatment of injuries to the driver and passengers of the policyholder’s vehicle. At its broadest, PIP can cover medical payments, lost wages and the cost of replacing services normally performed by someone injured in an auto accident. It may also cover funeral costs.
Property Damage Liability
This car insurance coverage pays for damage that you (or someone driving the car with your permission) may cause to someone else’s property. Usually, this means damage to someone else’s car, but it also includes damage to lamp posts, fences, buildings or other structural property that your car hit. Collision This coverage pays for damage to your car resulting from a collision with another car, object or as a result of flipping over. It also covers damage caused by potholes. Collision coverage is generally sold with a deductible of $250 to $1,000, and the higher your deductible, the lower your premium. Even if you are at fault for the accident, your collision coverage will reimburse you for the costs of repairing your car, minus the deductible. If you’re not at fault, your auto insurance company may try to recover the amount they paid you from the other driver’s car insurance company. If auto insurance company is successful in recovering the amount, you’ll also be reimbursed for the deductible as well.
Comprehensive
This car insurance coverage reimburses you for loss due to theft or damage caused by something other than a collision with another car or object, such as falling objects, fire, missiles, explosion, earthquake, vandalism, windstorm, hail, flood, riot, or contact with animals such as birds etc. Comprehensive auto insurance is usually sold with a $100 to $300 deductible, though you may want to opt for a higher deductible as a way of lowering your premium. Comprehensive car insurance will also reimburse you if your windshield is cracked or shattered. Some companies offer glass coverage with or without a deductible.
Uninsured and Underinsured Motorist Coverage
This coverage will reimburse you, a member of your family, or a designated driver if one of you is hit by an uninsured or hit-and-run driver. Underinsured motorist coverage comes into play when an at-fault driver has insufficient auto insurance to pay for your total loss. This coverage will also protect you if you are hit as a pedestrian.
