What Is Auto Insurance? Learn about your car insurance and what it covers.

Basic auto insurance for yourself is required by a majority of states. It provides some financial protection in the event in the event of an accident. But is it sufficient? What are the alternatives? Find out how car insurance works and what kinds of coverage are offered.

Car insurance
Auto Insurance

Understanding the fundamentals of auto insurance

A contract for insurance on autos is with the insurer which will protect you from any financial losses that might occur in the event of an accident , or theft. In exchange for you payment of a premium the insurance company agrees to cover your losses in the manner stipulated in the policy you signed.

Auto insurance provides coverage for:

  • Property like the theft or damage to your vehicle
  • Liability Your legal obligation to other people for bodily harm or property damage
  • Medical The cost of treatment for injuries, rehabilitation, and, sometimes, lost wages as well as funeral costs

Personal auto insurance for basic needs is required by a majority of U.S. states, and the laws differ. Insurance coverages for autos are priced per policy (a per-cash) which allows you to tailor the coverage amount to your specific needs and budget.

The policies are typically issued for one year or six months durations, and they can be renewed. The insurance company provides an email when it’s time to renew your policy and to pay the cost.

Who is covered under my auto insurance, and under what conditions?

Your auto policy will protect the family members of yours and others who are covered by your policy, regardless of whether they are driving your own car or else’s vehicle (with their consent). The policy also covers when someone not in your insurance is driving your vehicle with your permission.

The policy you have on your personal vehicle only protects your personal vehicle for commuting on your way to work, carrying out errands, or making a journey. It does not offer coverage for vehicles you use for commercial reasons, such as when you take pizza delivery.

Personal auto insurance may be ineffective for you if you utilize your car for transportation using a ride-sharing service like Uber as well as Lyft. Certain auto insurers however, are providing insurance options (at extra cost) that provide insurance coverage for drivers who offer ride-sharing services.

Are auto insurance policies mandatory?

Insurance requirements for autos differ between states. If you’re financing a vehicle the lender could have its own set of requirements. Every state requires motorists to carry:

  • Liability for bodily injury that covers the expenses resulting from the death or injuries that you or a driver cause while driving your vehicle.
  • Damage to property liability that reimburses other people for the damage you or a driver in your vehicle causes on another car or property, for example, an unfinished building, fence and utility pole.

Additionally, several states require you to be armed with:

  • Medical payments, also known as insurance for personal injuries (PIP), which will reimburse medical expenses for injuries sustained by passengers or you. Also, it covers the loss of wages as well as other costs.
  • Coverage for uninsured drivers will reimburse you if an accident occurs due to an individual who doesn’t have insurance on their vehicle, or in the event of an accident that is hit-and-run. It is also possible to purchase insurance for under insured motorist coverage that will pay for the costs if the other driver is not insured to cover the cost in the event of a serious crash.

Even even if PIP as well as uninsured motorist coverage is not mandatory in your state, you should consider including them in your insurance to ensure your financial security.

What other kinds of coverage for auto insurance are the most common?

Although most of the basic, legally required auto insurance policies cover the damages caused by your vehicle however, it will notcover damages to your vehicle. For protection of your vehicle take a look at the following coverage options:

  • Collision covers damages to your vehicle caused as a result of collisions with other vehicles or another object–e.g. trees or guardrail–when you’re the one to blame. While collision coverage does not cover mechanical issues or normal wear and tear to your vehicle, it can protect you from damage caused by potholes, or the result of rolling your car.
  • Comprehensive gives protection against the loss and damage that can be that is caused by incidents that is not a collision for example, flooding, fire vandalism, hail, trees falling down, or falling rocks and other hazards, even getting struck by an Asteroid!
  • Glass coverage offers protection against damages to your windshield that are typical. Certain policies on autos include no-deductible glass coverage. It also covers front and side glass windows, and glass sunroofs. You can also purchase supplemental glass protection.

How do I get gap insurance? Why do I really need it?

Comprehensive and collision insurance only provide coverage for the market value of your vehicle but not what you paid for it. And new cars appreciate rapidly. If your car is destroyed and/or stolen, you could be an “gap” between the amount you owe to the car and the insurance coverage. To make up for this you might want to consider buying gaps insurance to cover the gap. Be aware that when leasing a vehicle Gap coverage is generally integrated into lease payments.

Steps to follow:Check out this useful infographic about the different types of optional and required driver insurance coverages.

p infograph auto coverage
google Image credit

Last Updated : March 14, 2022 by Editorial Team

Published : March 14, 2022

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.