Auto insurance is a contract that is held between you and the insurance company. It protects you from bearing the financial loss if an accident occurs by you. It makes you agree to pay an amount of premium yearly to the insurance company and on the other hand makes the insurance company pay the losses to you that is mentioned in the insurance policy.
Auto Insurance offers the property coverage that pays you against the theft or damage of your car, legal responsibility to pay the liability coverage for property damage or for those which are bodily injured and medical coverage that pays the cost of treatment and lost of wages and expenses to you for your better existence.
Auto Insurance policy comprises six type of coverage for you. They are bodily injury liability, personal injury protection or medical payments, property damage liability, collision, comprehensive and underinsured motorist coverage.
Bodily injury liability is the insurance that covers the injury of you, the designated driver, the policy holder or somebody else. If you are driving some others car with permission and are involved in an accident seriously then you may demand a large sum of money for you and your family members who are also being covered by the policy.
Personal Injury Protection is the coverage that pays for the medical treatment against injury occurred to the policy holder’s car driver and the passengers. In this case, PIP (Personal Injury Protection) can cover the payments for medical treatment, lost wages and cost of services to those persons who are injured in that auto accident. It may cover the funeral costs also.
Property Damage Liability coverage pays for the damage done by you to some others car or someone else driving the car with your permission. It may damage a telephone pole, a lamp post, a fence or building by your car hit.
Collision is the coverage that pays for the damage to your car when a collision with some other car has been occurred. The damage may be caused by potholes or by flipping over. Collision coverage is usually sold with an amount deductible. The higher the deductible is, the higher is the premium. The insurance company will repay you the cost of repairing of your car even if you are at fault. But if you are not at fault the insurance company can try to recover the amount that is paid to you by the insurance company from the insurance company of the other driver. If they become successful then you will also be repaid for the deductible.
Comprehensive Coverage repay you for the loss that is caused due to an accident other than a collision like fire, explosion, missiles, earthquake, flood, windstorm or contact with unwanted animals or birds and so on. Comprehensive insurance is generally sold with an amount deductible as a technique of lowering your premium. This may also repay you if your windshield is broken.
Uninsured Motorist Coverage protects you from hit while you are walking on foot. The coverage will repay you and your family member or your driver if anybody is hit by an uninsured driver. He will have to pay for your total loss.
A maximum state involves you to purchase a few of this coverage. They wish you to carry an auto insurance to cover the liability in a certain smallest amount. If the accident is done by you, the law states that you will pay for the damage that occurred to the person who is not at fault. These includes the cost of property that have been damaged by you, the damages for his personal injury which bears the medical expenses and lost wages of the person including his pain and sufferings and also the loss of enjoyment throughout his life. These damages can be thousands of dollars against a simple minor accident.
That is why the insurance is required for you to be done.