Car Insurance

Car Insurance


What exactly is auto insurance? Auto insurance is simply a written contract between you, the insured, and your insurance provider that pay you financial loss if an accident occurs or some other loss is attributed to you. In return for your paying a regular premium, the insurer agrees to cover your losses as laid out in your coverage. Some auto insurance policies specify an amount of coverage that will be paid by the insurer for a certain amount of money. Others are called catastrophic policies. Generally speaking, a larger percentage of insurance policies will fall into the catastrophic category.

For instance, say that you are driving on a highway and a tractor trailer hits your car from behind. You are not at fault, but the other driver is injured and has chronic medical problems. If this accident provides coverage for the full repair of your car and the injured person’s medical bills, then it would be covered under your auto insurance policy. Your auto insurance will provide the other driver with financial assistance to cover these expenses. The cost of the damage to your vehicle will be paid by your auto insurance provider.

However, what about the collision coverage, or bodily injury liability, in this case? If the other driver is at fault, and you suffer no damages, how will you be compensated? This is the part that most people have trouble understanding. Each state requires car owners to have some form of bodily injury liability coverage, but the details vary from state to state. Bodily injury liability is designed to cover the costs associated with injuries sustained by other drivers who are not under the legal requirement to carry auto insurance. This part of your auto insurance coverage reimburses you for the medical expenses of a third party who was injured in a collision with you. States may also require you to have uninsured motorist coverage. With uninsured motorist coverage, what about the injured party? Will they be covered by their own insurance company?

Some states require that you have both collision and uninsured/underinsured motorist coverage, while others do not. You can check with your auto insurance agent about your state’s requirements. In many instances, your agent can make you aware of all of your state’s insurance regulations. While the specifics vary from state to state, there are some general guidelines you should be aware of. Some states require that you carry a certain minimum amount of bodily injury coverage, for example. Most states require bodily injury and/or uninsured/underinsured motorist coverage amount that are at least $1 million. There is no minimum amount of coverage, however, and you are responsible for paying the difference if your vehicle is damaged or destroyed. Medical payments, lost wages, and repair costs are not covered. To determine the exact costs you will incur, consult with your insurance agent.