What is auto insurance?
What is auto insurance?
Understand your Car insurance and what it covers
Auto
Insurance
Understanding
auto insurance-the basics Who is covered by my auto insurance-and under what
circumstances?
Is auto
insurance coverage mandatory?
What other
types of auto insurance coverage are typical?
What is gap
insurance and do I need it ?
Basic personal auto
Insurance
is mandated by most states and provides you with some financial protection in
case of an accident. But is it enough?
Learn
how car insurance works and what types of coverage are available.
Understanding auto insurance-the basics
Auto
insurance 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.
Auto
insurance provides coverage for
Property - such as damage to or theft
of your car
Liability – your legal responsibility
to others for bodily injury or property damage
Medical – your cost of treating
injuries, rehabilitation and sometimes lost wages and funeral expenses
Basics
personal auto insurance is mandated by most U.S. states, and laws vary. Auto insurance
coverages are priced individually (a carte)to let you customize coverage
amounts to suit your exact needs and budget.
Policies
are generally issued for six-month or one-year timeframes and are renewable.
The insurance company sends a notice when it’s time to renew the policy and pay
your premium.
Who is covered by my auto insurance – and under what circumstances?
Your
auto policy will cover you and other family members on your policy, whether
driving your car or someone else’s car (with their permission). Your policy
also provides coverage if someone who is not on your policy is driving your car
with your consent.
Your
personal auto policy only covers personal driving, whether you’re commuting to
work, running errands or taking a trip. It will not provide coverage if you use
your car for commercial purposes – for instance, if you deliver pizzas.
Personal
auto insurance will also not provide coverage if you use your car to provide
transportation to others through a ride – sharing service such as Uber or Lyft.
Some auto insurance, however, are now offering supplemental insurance products
(at additional cost) that extend coverage for vehicle owners provide ridesharing
services.
Is auto insurance Coverage mandatory?
Auto
insurance requirements vary from state to state. If you’re financing a car,
your lender may also have its own requires car owners to carry:
Bodily injury liability – which covers
costs associated with injuries or death that you or another driver causes while
driving your car.
Property damage liability – which reimburses
others for damage that you or another driver operating your car causes to
another vehicle or other property, such as a fence, building or utility pole.
In
addition. Many states require that you carry:
Medical payments or personal injury
protection (PIP) which provides reimbursement for medical expenses for
injuries to you or your passengers. It will also cover lost wages and other
related expenses.
Uninsured
motorist coverage
Reimburses
you when an accident is caused by a driver who does not have auto insurance –
or in the case of a hit – and – run. You can also purchase under insured
motorist coverage, which will cover costs when another driver lacks adequate
coverage to pay the costs of a serious accial protection.
What other types of auto insurance coverage are typical?
While
most basic, legally mandated auto insurance covers the damage your car causes,
it does notcover damage to your own car. To cover your own car. You should
consider these optional coverages:
Collision reimburses you for damage to
your car that occurs as a result of a collision with another vehicle or other
object – e.g., a tree or guardrail – when you’re at fault. While collision
coverage will not reimburse you for mechanical failure or normal wear and –
tear on your car, it will cover damage from potholes or from rolling your car.
Comprehensive provides coverage against
theft and damage caused by an incident other than a collision, such as fire,
flood, vandalism, hail, falling rocks or trees and other hazards – even getting
hit by an asteroid!
Glass Coverage provides coverage from
windshield damage, which is common. Some auto policies include no – deductible glass
coverage, which also includes side windows, rear windows and glass sunroofs. Or
you can buy supplemental glass coverage.
What is gap insurance and do I need it?
Collision
and comprehensive only cover the market value of your car, not what you paid
for it – and new cars depreciate quickly. If your Car is totaled or stolen,
there may be a “gap” between what you owe on the vehicle and your insurance
coverage. To cover this, you may want to look into
Purchasing
gap
insurance to pay the difference. Note that for leased vehicles. Gap
coverage is usually rolled into your lease payments.
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