AUTO INSURANCE ARTICLE

Car Insurance Basics

By: AutoInsuranceGuy

An auto insurance policy is an agreement that protects you, your family and your finances in the event of vehicle accident. For most states in the US, car insurance is mandated with minimum auto insurance requirements while others have mandated financial responsibility laws. Some of these are New Hampshire and Wisconsin where only financial responsibility laws are required. For those states with mandated financial responsibility laws, the at-fault driver is required to pay or show sufficient funds to pay for any car insurance claims. This shows that having an auto insurance policy is relatively practical instead of producing proof of satisfactory assets. Having a good car insurance plan will considerably avoid lawsuits and vehicle repair expenses.

According to the Insurance Information Institute (or III), an auto insurance policy has basic policy types and some of these insurance policy types are required by the state laws while others are optional. These types of coverage are bodily injury liability, property damage, personal injury protection or medical payments, comprehensive and collision coverage, uninsured and underinsured motorists’ coverage.

Liability Insurance. This type of coverage is considered as the most important policy on car insurance. Aside from being required by most states, liability car insurance will pay for the damages you caused to others which includes bodily injury and property damage. Bodily injury coverage is the one pays for lost wages, medical expenses and even death. It also covers the passengers who were in the car in the event of accident. While property damage liability coverage will pay for the replacement or repair of the things you ruined aside from your car. Furthermore, some party may also sue the at-fault driver for ‘pain and sufferings’.

Although buying only the minimum requirements may get the cheaper rates on auto insurance, if you are the at-fault driver in a serious vehicle accident, the minimum auto insurance you purchase may not be sufficient to cover the cost. Here are the optional car insurance policies but some of these are also required by some states:

Comprehensive Coverage. This type of coverage will pay for any damage except by car accident or collision. Basically, this auto insurance policy will cover the expenses for the damages caused by theft, vandalism, fire and other unknown party.

Collision Coverage. Generally this type of coverage is the most expensive among the others. This coverage option will pay for the damages due to accident or collision with another vehicle. In addition, it will cover the expenses whoever is at fault in the event of accident.

Personal Injury Protection PIP / Medical Expenses. This coverage will pay for you and the passengers’ medical expenses after a serious car collision. The expenses can be paid off from the accident if you’re driving your own car or in somebody else’s car. This type of coverage will pay the expenses regardless of who is at fault in the accident.

Uninsured and Underinsured Motorist Coverage. Uninsured Motorist coverage pays for the damages caused by the uninsured driver and this cover option pay the medical expenses brought by the accident. While underinsured motorist coverage pays for the damages caused by a driver with insufficient car insurance.