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Auto Insurance Policy Basics

Most states require car owners to have a basic auto insurance policy. This car insurance will consist of liability insurance which will give you minimum coverage in case of an accident in which you or someone who has permission to drive you vehicle is the at fault. This said it is advisable to have more than just liability insurance for your vehicle.

Generally a basic auto insurance policy has six possible types of coverage. These six types of car insurance are bodily injury liability, property damage liability, medical payments or personal injury protection otherwise known as PIP, collision, comprehensive, and uninsured or underinsured motorist coverage.

The liability auto insurance policy your state may require you to carry includes bodily injury, property damage, and uninsured or underinsured motorist coverage. The bodily injury part of you car insurance covers the injuries you or someone you have allowed to drive your vehicle inflicts on someone else in an accident. It will pay medical bills and lost wages. The property damage portion of your auto insurance policy pays the damage you or someone driving your car with consent does to someone else’s car, fence, lamppost or other physical property. The uninsured or underinsured portion of your car insurance covers you or the designated driver of your car when the other person causes the accident but does not have adequate insurance to cover medical bills and property damage. Something to keep in mind when you purchase your auto insurance policy is that if you do not have enough coverage on your liability portion of the car insurance, you will be held accountable for the remaining expenses and could find yourself in a lawsuit so be sure you have an adequate amount of insurance on your policy.

Collision and comprehensive coverage is not required by the states for the individual auto insurance policy. Collision car insurance covers repairs to your vehicle in an accident. If the cost of the repairs is close to the value of the car, the insurance company may total your car and pay you the cash value. Comprehensive insurance covers other types of damages to your car such as theft, vandalism, acts of nature, collisions with wild animals and fire. This is also the portion of you auto insurance policy which will cover glass breakage. The choice to have car insurance that includes collision or comprehensive is yours. You can lower the costs of these two portions by setting higher deductible levels for either one or both but remember that you will need to come up with the money to cover that deductible when and if you ever need it.

Medical payments and PIP are two other types of car insurance you may opt for. The medical payments portion of your auto insurance policy will cover the medical expenses you and passengers in your car incur as the result of an accident. They also cover you if you are driving another person’s car at the time of the accident. PIP car insurance coverage will cover medical expenses, lost wages, and funeral costs.


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