What is Auto Insurance?
Auto Insurance is probably the most common form of insurance as most people do drive and when you drive, it is the law to carry auto insurance.
Your Auto Insurance coverage’s are financial protections for you, your car, and others in the event of an accident or loss where you could be considered responsible. Even though it may not be your fault, the fact that it’s your car may make you responsible. Each coverage on an auto policy accomplishes different things, and having them all will protect you for many situations.
Each state does establish minimum insurance requirements as you do not have to purchase every coverage, and you can buy higher limits of these coverage’s. Just remember, the more protection you buy means the price will be higher.
The amount of insurance protection you buy is up to you. You should consider what you have to lose if you don’t have enough insurance protection when someone points the finger of responsibility at you. The following are simple explanations of various auto insurance coverage’s:
The liability in an auto policy has two components.
BODILY INJURY LIABILITY (BI)
This coverage protects you if you are involved in an accident and you caused bodily injury to others. It also provides you with a legal defense in case someone sues you because of the accident. If your car is leased, your lease company may require you to buy higher limits of this coverage. THIS COVERAGE IS REQUIRED TO DRIVE LEGALLY.
PROPERTY DAMAGE LIABILITY (PD)
This coverage protects you if you are involved in an accident and you cause damage to someone else’s property. If your car is leased, your lease company may require you to buy higher limits of this coverage. THIS COVERAGE IS REQUIRED TO DRIVE LEGALLY.
This coverage pays you and other passengers in your car for injuries you may receive if someone without insurance hits you. It also covers you if they don’t have enough insurance. The state requirements on Property Damage can be very low so if you have a vehicle with a good value – you need this coverage.
This coverage pays medical expenses from an accident for you and your passengers, regardless of fault. This coverage can be in excess of any other health insurance coverage you may have. However, it will pay your health coverage deductible and other non-covered expenses from an accident.
This coverage pays for damages to your car caused by something other than a collision, such as fire, theft, vandalism, or windstorm. This coverage usually has a deductible that you pay to offset costs. A higher deductible means a lower price for this coverage. THIS COVERAGE IS REQUIRED IF YOUR CAR IS FINANCED OR LEASED.
This coverage pays for damages to your car, regardless of fault, when you hit another car or object. This coverage usually has a deductible that you pay to offset costs. A higher deductible means a lower price for this coverage. THIS COVERAGE IS REQUIRED IF YOUR CAR IS FINANCED OR LEASED.
Collision insurance can cover you in the event of an Uninsured Motorist hitting you but doesn’t offer the Medical Component, Reduced Deductible (in most cases), and Uninsured Motorists may not count against your claim record.
This coverage helps offset the cost of towing your vehicle. It usually allows coverage up to a predetermined amount for each towing incident.
RENTAL CAR REIMBURSEMENT
This coverage helps offset the cost of renting a car while your car is being repaired because of a collision. It usually pays a predetermined daily amount for a certain number of days.
These auto insurance coverages are all worth the cost, should you be involved in an accident, and you should consider the cost of each of them.
Every policy is different and your individual needs and situation will impact the type of policy you will get and the coverage that will be offered.