Auto insurance is a type of insurance coverage that provides financial protection against losses and damages that may occur as a result of owning or operating a motor vehicle. It is a contract between the vehicle owner and an insurance company, where the owner pays a premium in exchange for coverage in case of an accident, theft, or other covered events.
Auto insurance isn’t only great protection for your vehicle, it’s also the law. All states require some degree of insurance for your vehicle to protect you and other motorists. Coverage requirements will vary based on your financial responsibility for your car and your state’s requirements. Some states even require you to have liability insurance before you even get a license.
Auto insurance typically offers several types of coverage, including:
- Liability coverage: This is the most basic and mandatory form of auto insurance in many countries. It covers bodily injury and property damage caused to others in an accident for which the insured driver is deemed responsible.
- Collision coverage: This coverage pays for the repair or replacement of the insured vehicle if it is damaged in a collision, regardless of fault. Collision coverage is usually subject to a deductible, which is the amount the insured must pay out of pocket before the insurance coverage kicks in.
- Comprehensive coverage: Comprehensive coverage protects against non-collision events such as theft, vandalism, fire, natural disasters, and falling objects. Similar to collision coverage, comprehensive coverage is also subject to a deductible.
- Personal injury protection (PIP) or Medical Payments (MedPay): PIP or MedPay coverage pays for medical expenses, lost wages, and other related costs for the driver and passengers injured in an accident, regardless of fault.
- Uninsured/underinsured motorist coverage: This coverage protects you if you are involved in an accident with a driver who doesn’t have insurance or whose insurance coverage is insufficient to cover your losses. It can help pay for medical expenses, vehicle repairs, and other damages.
It’s important to review and understand the terms and conditions of your auto insurance policy carefully. Each policy may have different coverage limits, exclusions, and conditions. If you’re unsure about any aspect of your coverage, reach out below for a free consultation.