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What is Auto Insurance?
Auto insurance, also called car insurance, is an agreement that a driver makes with their chosen insurance company.
Auto insurance coverage protects the driver and the owner of the vehicle from any financial loss due to an accident. The majority of people are familiar with liability insurance, which is one type of auto insurance policy.
That agreement protects the driver against financial issues that arise after an accident. In exchange, the driver pays a premium to the insurance company.
Should an accident occur, the insurance company covers the losses covered once the insured pays the deductible. A deductible is a sum that the insured individual has to pay before the insurance company will cover the rest of the damages.
Types of Auto Insurance
There are three types of insurance for your automotive:1. Property Insurance
This type of auto insurance protects you from financial loss if you were found to be at fault in an accident. It covers damages done to a vehicle as well as other properties, which includes theft, vandalism, and natural disasters. If you were at fault in an accident, property insurance will pay for your losses. The owner of the vehicle is responsible for the deductible amount. This is one form of auto insurance that is required by law in most states and countries. Check with your state’s laws to make sure you understand their requirements and regulations before purchasing a policy or renewing a policy.2. Liability Insurance
This type of insurance covers legal responsibility to other drivers for bodily harm or property damage. In other words, liability insurance pays any damages to another person who was hurt in the accident with you. In some cases, this could include other drivers or passengers who are injured or killed in an accident with you. If you are sued after an accident, liability insurance pays legal fees incurred by both parties involved in the case should they choose to pursue it.3. Medical Insurance
This type of insurance covers medical expenses that are not covered by your health insurance. If you were to be involved in an accident, and you were injured, this type of insurance will cover medical bills not covered by your health insurance. Medical expenses include medical costs incurred during the time of the accident, such as surgery, hospitalization, and medications. Medical insurance also covers any time after the accident when you need medical attention because of your injuries. This also includes rehabilitation, loss of wages, or funeral expenses, where applicable. While US law requires basic car insurance in most states, some drivers choose more well-rounded coverage. More coverage means a higher premium most of the time. However, several additional factors play a role in premium calculations including age, gender, and driving history.Who/What Does a Policy Cover?
Depending on the type of coverage a person pays for, the people and property covered in the policy differ. Auto insurance policies cover the main individual listed in the policy. Typically, they also cover listed family members, whether they drive their own vehicles or someone else’s. Auto insurance policies may also cover individuals who borrow the insured’s car but are not listed in the policy. Other auto insurance coverage options, like personal auto insurance, will only cover a vehicle when it is being driven for personal use. If the vehicle is for commercial purposes (like ride-sharing), incidents that take place are not covered by the personal auto insurance. There are supplemental add-ons that a person can add for commercial protection. There are also short-term options for individuals who are using a rental vehicle. Drivers also have the option to add the uninsured motorist coverage to their policy. This coverage protects the individual and their vehicle when a driver who doesn’t carry insurance causes an auto accident. Similarly, there’s the option of taking the underinsured motorist policy, which covers accidents with a driver who is lacking the appropriate amount of insurance. Other types of coverage offered in an auto insurance include:- Personal Injury Protection: This coverage, also known as the bodily injury liability coverage, allows drivers and passengers to be reimbursed for any medical expenses that they may incur following an accident. This type of coverage protects the insured from any financial losses due to bodily injury. This includes the expenses of medical care and hospitalization. In this case, the injured party may also be relieved of lost wages if the party is forced to miss work.
- Collision Insurance Coverage: This type of coverage covers the damages to your vehicle from an accident. Collision covers the amount of repairs necessary to repair the damage, regardless of which driver is to blame for the accident.
- Property Damage Liability: This coverage will cover any and all the costs that are associated with any damage to your vehicle, regardless of who caused the damage. This includes damages made to other vehicles or property nearby, such as road signs, bus shelters, or fences.
