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Guide to Understanding Auto Insurance

Auto insurance is a contract that you enter into with an insurance provider that agrees to protect you and your vehicle against financial loss in the event of theft or an accident.

In exchange for a monthly premium paid by you, the insurance provider agrees to cover your losses depending on the type of policy you pick. They usually cover:

Property damages to your vehicle or theft

Your legal liability to pay for bodily injuries or property damage caused to someone else

The medical cost of treating any injuries, loss of wages, rehabilitation, or funeral expenses

Here Are the People that Get Covered by Your Auto Insurance

Your auto policy usually covers you and other family members that have been added to the plan, whether they are driving your car or someone else’s car with their permission. Your insurance policy also extends coverage to a third party driving your vehicle with your consent.

While your insurance has you covered in personal driving situations like commuting to work, taking a trip, or running errands, it doesn’t cover any commercial driving purposes.

Yes, Auto Insurance Is Mandatory

The majority of the states across the nation require drivers to have auto insurance coverage. Almost every state requires car owners and drivers to carry:

Bodily injury liability covers costs associated with injuries or death caused by you or someone else driving your car.

Property damage liability that reimburses others for the vehicle repair costs or property damage caused by your car.

Also, you may be required to have:

Personal Injury Protection covers medical expenses for any injuries to you or your passengers.

Uninsured motorist coverage reimburses you when the accident is caused by someone who doesn’t have insurance coverage or in case of a hit-and-run incident.

Types of Common Auto Insurance Coverages

While most basic auto insurances cover the damages your car causes in an accident, you need other policies to cover the damages you face. Here are some of the most common types of auto insurance coverages:

Collision coverage: reimburses you for the damage your car incurs in an accident with another object or vehicle when it is your fault.

Comprehensive coverage: provides coverage against damages caused by accidents other than collisions like theft, fire, flood, hail, vandalism, falling rocks or trees, and others.