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Auto Insurance

A Primer on Auto Insurance

If you drive your own car, you are required to carry an auto insurance policy. Let’s take a look at how car insurance works, the different types of coverage and the benefits of having such coverage.

What Is Car Insurance?

Car insurance is a policy that protects the driver from the financial impact of an accident. If property damage occurs or a driver or passenger is injured in a crash, the policy will cover the cost up to a predetermined amount. In some cases, accidents are treated in a no-fault manner, which means each person pays for his or her own damage or injuries.

What Are the Different Types of Coverage Available?

General liability insurance covers you for basic damage and bodily injury caused in a crash. Collision coverage will pay to repair your car in the event of an accident while comprehensive coverage pays for damage that occurs for any other reason. Liability and bodily injury coverage are mandatory in most states. It may also be possible to acquire underinsured/uninsured coverage to protect you in the event that you are hit by a driver who doesn’t have coverage or doesn’t have enough coverage.

What Are the Benefits of Auto Coverage?

First, having coverage keeps you in compliance with the law, which helps you avoid getting a ticket or going to jail. Your policy will pay anywhere from $5,000 to $100,000 per person in damages if you are in an accident deemed to be your fault. Without coverage, you could lose your home or other possessions to liquidation to cover the damages.

Car insurance provides many benefits even if you don’t have to use it. Each time you get behind the wheel, you know that you are financially protected if you are in an accident no matter who causes it or what your financial situation may be.