Car insurance is a contract between you and an insurance company. You agree to pay premiums for protection against financial losses caused by an accident or other damage to the car.
Auto insurance can cover:
• Damage to a vehicle, whether it’s yours or someone else’s.
• Accident-related property damage or injuries.
• Medical bills or funeral costs related to accident-related injuries.
The exact details of what’s covered depend on what your state’s minimum coverage requirements are and whether or not you choose to add any extra coverage. Every state except New Hampshire requires drivers to have at least a certain amount of bodily injury responsibility coverage and property damage liability coverage.
How Car Insurance Works
In exchange for paying the premium, the insurance company agrees to compensate for your losses as stated in your policy. Policies have their prices, so you can change the amount of coverage to fit your needs and budget. Most policy terms are for six or twelve months, and they can be renewed. When renewing the policy and paying another premium, the insurer will let the customer know.
READ ALSO: 7 of Texas’s best lawyers for accidents
Almost every state requires car owners to have bodily injury liability insurance, even if they don’t require a minimum amount of insurance. This pays for injuries or deaths that you or another driver cause while driving your car. They may also need property damage liability, which pays for damage that you or another driver in your vehicle do to another vehicle or property.
Various types of Car Insurance
One reason car insurance can seem hard to understand is that it covers many different things. Most states require you to have at least a certain amount of coverage, and you can add more coverage to help cover costs in more situations.
Here are the different kinds of coverage you’ll find in auto insurance.
In most states, this is a must-have insurance. Your policy may have two kinds of liability coverage: coverage for injuries to people and damage to property. If an accident happens and you are found to be at fault, liability insurance helps pay for the other person’s costs.
When you have bodily injury liability coverage, your insurance helps pay for the other person’s medical bills. With property damage liability, your insurance helps pay for damage that your car causes to the other person’s car or to buildings.
Personal injury protection
In some states, you may be able to choose between PIP insurance and medical payment insurance. Personal injury coverage protects you in more ways than medical payment coverage. It protects you and the other people in your car in case of an accident. PIP pays for medical bills, lost wages, and other costs that aren’t medical.
Comprehensive coverage pays for a lot of different kinds of damage to your car, as long as a crash didn’t cause it. Most policies cover damage from hail, floods, tornadoes, hitting an animal, fire, theft, vandalism, and falling objects.
Most states require you to have coverage for uninsured and underinsured drivers. This helps pay for your medical bills and car repairs if the other driver is at fault in an accident but doesn’t have enough insurance or doesn’t have any.
If you cause an accident, collision coverage helps pay for the damage to your car. When a moving vehicle hits something, this is called a collision. It could be a mailbox, a guardrail, car, or something else that is not alive. Collision coverage might also cover you if you hit a pothole or roll your car.