Auto insurance is a necessity Almost every state requires drivers to have some form of auto insurance to ensure they can cover the costs of damage they cause in an accident. In addition, other types of insurance cover damage to your own car as well as injuries caused by an accident.
There are five major types of auto insurance: liability, collision, comprehensive, personal injury and uninsured motorist. Liability insurance pays for damages to cars or property caused by the accident. It is the minimum amount of insurance required by most states. Collision coverage pays for damage to your car caused by an accident. Comprehensive coverage pays for loss to your vehicle that’s caused by something other than an accident, such as fire, weather damage, vandalism or theft. Personal injury insurance covers the costs of injuries to you and your passengers in an accident. Uninsured motorist coverage pays for damage to your car caused by a driver who is either uninsured or underinsured.
How insurance works
Insurance for your vehicle pays for damages and injuries caused in an accident. If you have liability coverage, your insurance will pay for damages in an accident that is your fault. Other types of coverage are available at additional cost. You pay a monthly or annual premium that varies based on the type of insurance you have and other factors, including your driving record and the value of your car. With the exception of liability insurance, you also have a deductible, which is an out-of-pocket amount you must pay on each claim before your policy kicks in.
Major benefits of insurance
In addition to complying with legal requirements, having a car insurance provides a number of other benefits. If you have a car with a loan, having collision and comprehensive insurance ensures your investment is protected and that you don’t wind up paying for a smashed-up car you can’t drive. Carrying uninsured driver insurance ensures your car will get fixed even if you are hit by someone without insurance. And having personal injury protection ensures you have additional coverage to pay for injuries to yourself and passengers in a serious accident.