A contract between you, the insurance company, and your auto insurance policy is an agreement. A premium is paid. The insurance company will pay a premium in return for specific financial losses related to your car, provided that the coverage limits are met.
Many states require you to have minimum amounts of automobile liability insurance. The law requires you to pay for the injuries sustained by anyone else if you are at fault in an auto accident. These damages can include property damage. This is the cost of repairing or replacing any property you have damaged. Personal injuries can also be included. These include medical expenses, lost wages, damages for pain and suffering, permanent injuries, and loss or enjoyment of life. Even for minor accidents, these damages can reach thousands of dollars. Proper insurance is vital to your financial health.
What’s in my Auto Policy?
Four types of coverage are available in a standard private passenger auto insurance policy. These coverages include Liability Coverage and Medical Payments Coverage. Uninsured motorist Coverage (Underinsured Motorist Coverage) also covers damage to your car (Comprehensive or Collision).
Liability coverage covers you against personal injury and property damage that results from the use, maintenance, or ownership of a covered vehicle. You will be covered while driving any car or pickup truck, provided you have permission from the owner. Your car, pickup or van will be covered if it is being used by someone else with your permission. You will be able to choose the limits of your liability at the time that the policy is issued. You can choose the maximum amount we will pay for a loss.
Medical payments coverage covers medical expenses incurred by you or a loved one as a result of an automobile accident. It covers people who live in covered vehicles. You will select a coverage limit at the time that the policy is issued. You will choose the maximum amount that will be paid to each person for a single accident.
Although liability coverage is important and often necessary, many people are not responsible enough to purchase insurance. Uninsured motorists can cause an accident and you won’t be able recover damages. Uninsured motorist insurance will cover you for any property damage or bodily injury that is caused by uninsured drivers. It will protect you, your family members, and any person who is a occupant of a covered vehicle. You can select lower limits, but the coverage limits are generally the same as for liability.
Sometimes, a person responsible for an accident may have liability insurance. However, your damages are beyond the coverage limits. Some states include coverage for underinsured drivers in their uninsured motorist coverage. You can also purchase underinsured driver insurance that covers excess losses up to the policy’s limit.
Insurance companies will cover damage to covered vehicles regardless of fault if you have collision and comprehensive coverage. If your vehicle is financed, most banks and finance companies will require that you have comprehensive and collision coverage.