Auto insurance is insurance coverage for your car. It is basically a contract between an automobile owner and an insurance company. The insurance company agrees to provide financial assistance during the event of loss due to an accident. The owner pays a monthly premium for this coverage, and the insurance policy determines the types of losses that are covered. These policies generally are renewed every six months.
Types of Auto Coverage
1. Property damage is for damage or theft of an insured vehicle. This pays for damages to another person’s property.
2. Comprehensive is a catch-all type of coverage for a variety of damages.
3. Bodily injury liability is for medical bills of other people who were injured in an accident caused by you. This will also pay your portion of legal responsibility for bodily injuries and property damage to others.
4. Collision pays for losses when you hit another vehicle or an object, such as a tree.
5. Medical pays the medical bills of the insured driver and his or her passengers. This might also include rehabilitation services, funeral expenses, and lost wages.
6. Uninsured or underinsured motorist coverage is for reimbursement if the other driver doesn’t have insurance or enough insurance to cover your expenses.
You do not need all of this coverage unless you want it all. However all states do require that drivers have liability coverage. A state’s financial responsibility laws set the minimum insurance coverage drivers must have. It is also possible that a lender may require you to have collision and comprehensive auto insurance to get approved for a loan.