Auto insurance is a contract between a policyholder and an insurance company. The policyholder agrees to pay a premium, and the insurance agency agrees to cover losses as defined in a policy.
Auto insurance includes property, liability, and medical coverage:
-Property insurance pays for damage to, or theft of, a car.
-Liability insurance pays for the policyholder’s responsibility to others for physical injury or property damage in the event of an accident.
-Medical insurance covers the cost of rehabilitation, treating injuries, and sometimes lost wages or funeral expenses.
Most US states require drivers to have auto liability coverage before they can legally drive. All states have laws regarding minimum insurance and other guidelines that compel drivers to pay for the harm caused by their negligence if an accident occurs. Basic car insurance policies consist of different kinds of coverage, and they last for six months to a year.
Here’s what auto insurance plans can cover:
Bodily Injury Liability
Bodily injury liability coverage protects you against financial losses if you cause physical injuries to another person while driving. If someone else is injured because you’re not paying attention, and it’s determined that your negligence caused the accident, bodily injury liability covers their medical bills and other expenses.
Medical Payments or Personal Injury Protection
Personal injury protection or PIP covers your medical expenses, lost wages, or replacement of services to compensate for the loss of a family member. It’s compulsory in some states. The amount you receive will depend on your bills and income.
Property Damage Liability
The property damage liability section of your auto insurance policy will pay for damages you cause to someone else’s property in an accident. For example, this coverage will pay for the repairs if you hit a telephone pole, fence, or other structure.
Collision Coverage
Collision coverage is the most important of all the auto insurance coverage types. It pays out if your vehicle is damaged by another car or object. Collision coverage is sold with a deductible. The higher it is, the lower your premium will be. Start by reviewing your deductible to save on your car insurance premiums.
