Auto Insurance
Most states require basic personal auto insurance, which provides you with some financial protection in the event of an accident. Is it, however, sufficient? What are the alternatives? Learn about auto insurance and the many types of coverage that are available.
The Fundamentals of Auto Insurance
Auto insurance is a contract you enter into with an insurance provider that protects you against financial loss in the case of an accident or theft. The insurance provider promises to reimburse your losses as stipulated in your policy in exchange for you paying a premium.
Auto insurance protects you against the following risks:
- Property – for example, damage to or theft of your car
- Liability refers to your legal obligation to others in the event of physical harm or property damage.
- Medical expenditures include the cost of treating injuries, rehabilitation, and, in certain cases, lost wages, as well as burial expenses.
Most states in the United States require basic personal auto insurance, while rules vary. Auto insurance coverages are priced separately (a la carte), allowing you to tailor coverage levels to your specific requirements and budget.
Policies are usually given for six months or a year and are renewed. When it’s time to renew your coverage and pay your premium, the insurance provider sends you a notification.
Who Will Car Insurance Protect?
Your vehicle insurance coverage will cover you and any other family members on your policy, whether you are driving your own car or someone else’s (with their permission). The policy also covers you if someone who is not on your policy drives your car with your permission.
Your personal auto insurance policy only covers personal driving, whether you’re commuting to work, running errands, or going on a trip. It will not cover you if you use your car for commercial purposes, such as delivering pizzas.
Is Vehicle Insurance Coverage Compulsory?
The requirements for auto insurance differ from state to state. If you are financing a car, your lender may have additional requirements. Almost every state requires automobile owners to have:
- Bodily harm responsibility – this covers the costs of injuries or death caused by you or another motorist while operating your automobile.
- Property damage liability – compensates others for damage caused by you or another driver operating your vehicle to another vehicle or other property, such as a fence, building, or utility pole.
Morever, many states request you to carry:
- Medical payments or personal injury protection (PIP), which reimburses you for medical expenditures if you or your passengers are injured. It will also cover lost wages and other associated costs.
- Uninsured motorist coverage reimburses you if you related to an accident caused by a driver who does not have vehicle insurance, or if you are the victim of a hit-and-run. You may also get uninsured motorist policy, which will cover charges if another driver does not have enough coverage to cover the costs of a major collision.
What Are Typical Types Of Car Insurance?
While most basic, legally required auto insurance covers damage caused by your vehicle. It does not cover damage to your own vehicle. Consider the following optional coverages for your own car:
- Collision coverage compensates for damage to your car caused by a collision with another vehicle or an object, such as a tree or railing, in which you are at fault. While collision coverage excludes mechanical breakdown and natural wear and tear on your car. It does include damage caused by potholes or rolling your vehicle.
- Comprehensive insurance protects against theft and damage caused by events other than collisions, such as fire, flood, vandalism, hail, falling rocks or trees. Besides, other hazards—even being struck by an asteroid!
- Glass Coverage protects you against typical windshield damage. Some vehicle insurance policies provide no-deductible glass coverage, which includes side and rear windows, as well as glass sunroofs. You may also purchase additional glass covering.
