An automobile insurance policy is a contract between you and the insurance company that protects you against financial loss in the event of an accident or theft. In exchange for your paying a premium, the insurance company agrees to pay your losses as outlined in your policy.<\/p>
Basic personal auto insurance is mandated by most states and provides you with some financial protection in case of an accident.\u00a0An automobile insurance policy provides coverage for:<\/p>
Basic personal auto insurance is mandated by most states, and laws vary. Auto insurance coverages are priced individually (a la carte) to let you customize coverage amounts to suit your exact needs and budget.<\/p>
Policies are generally issued for six-month or one-year timeframes and are renewable. The insurance company sends a notice when it\u2019s time to renew the policy and pay your premium.<\/p>
An automobile insurance policy is effectively a contract between yourself and an insurance company in which you agree to pay premiums in exchange for protection against financial losses stemming from an accident or other damage to the vehicle. Auto insurance can offer coverage for:<\/p>
The\u00a0exact details of what’s covered\u00a0depend on the minimum coverage requirements for your state and any additional coverage options you choose to include. Every state except New Hampshire requires drivers to have a minimum amount of bodily injury liability coverage and property damage liability coverage.<\/p>
Depending on where you live, you may be required to purchase one or more of the following.<\/p>
Liability car insurance\u00a0pays\u00a0others<\/em>\u00a0when you cause a car crash that results in damage or injuries to others. It also pays for your legal defense in case you\u2019re sued because of an accident. Here are some examples of what liability insurance covers:<\/p> Liability car insurance covers accident-related injury and property damage expenses incurred by other drivers and their passengers if you\u2019re at fault for an auto accident. It aIso covers legal expenses, settlements and judgments if you\u2019re sued after an accident. It is required in every state, except in New Hampshire (where you don\u2019t have to carry auto insurance if you can meet the state\u2019s minimum financial responsibility requirements) and Virginia (where you can pay an uninsured motorist fee of $500 instead of buying car insurance). <\/p> Even in those states, buying an auto insurance policy is the easiest way to ensure you\u2019re well-protected if you cause a car accident.<\/p> The minimum required amount will vary depending on your state. It\u2019s better to buy more than your state\u2019s minimum. That\u2019s because state minimums can be woefully inadequate if you cause an accident with multiple injuries. You\u2019ll be on the hook for any medical expenses above your policy limits. <\/p> You\u2019ll want enough liability insurance to cover what can be taken from you in a lawsuit.<\/p> Collision insurance covers damage to your own vehicle after a collision, such as with another vehicle or a pole. Comprehensive coverage pays for specific damage caused by non-collision events, such as theft, floods, fire, falling objects and vandalism. <\/p> If you want coverage for car repair bills,\u00a0collision and comprehensive insurance\u00a0cover a wide range of problems. They\u2019re often sold together. If you have a car loan or lease, your lender or leasing agent will likely require you to carry both of them.<\/p> If you file a claim under one of these types of auto insurance, your insurance claims check will be reduced by your deductible. For example, if you have a $500 deductible and your car repair bill is $2,000, your insurance check will be $1,500.<\/p> Medical payments coverage, sometimes called MedPay, covers medical bills for you and your passenger for injuries suffered in a car accident, regardless of who caused the accident. It\u2019s usually sold in small amounts of coverage, often between $1,000 to $5,000. <\/p> MedPay is not available in every state.<\/p> Personal injury protection\u00a0(PIP) coverage is similar to MedPay and covers medical expenses for injuries suffered in a car accident for you and your passengers, no matter who caused the accident. PIP generally pays for:<\/p> Many states require PIP and it\u2019s sometimes part of the \u201cno-fault auto insurance\u201d laws, which generally require you to make smaller injury claims on your own PIP insurance. PIP is optional in some states and not available in others.<\/p> Uninsured motorist (UM) insurance and underinsured motorist (UIM)\u00a0insurance pay for your medical expenses<\/em>\u00a0if someone crashes into you who has no insurance or not enough. It covers medical and injury-related expenses for you or your passengers if you\u2019re in an accident with an uninsured driver. May also cover damages to your vehicle, depending on your state. <\/p> However, this automobile insurance policy\u00a0does not pay the driver who\u2019s uninsured.<\/p> UM can also pay for your medical expenses if another driver\u2019s insurance denies coverage or goes out of business. Drivers who live in states that require drivers to carry uninsured motorist insurance will need. It may also be especially helpful to those who don\u2019t have health insurance to cover their medical costs if injured by an uninsured driver.<\/p> UM coverage pays for:<\/p> Uninsured motorist insurance is required in some states. In other states, your car insurance must offer you this coverage, but you can typically reject it in writing. UM is generally a good coverage to have. You\u2019ll usually purchase UM in coverage amounts that match your liability insurance.<\/p>Collision and comprehensive insurance<\/strong><\/h3>
Medical Payments (MedPay)<\/strong><\/h3>
Personal Injury Protection (PIP)<\/strong><\/h3>
Uninsured motorist coverage<\/strong><\/h3>