How Does Car Insurance Work?
Depending on the policy you select, automobile insurance can offer financial security in the event that your vehicle is damaged or stolen, you are hurt in an accident, or you are found to be at blame for an incident resulting in property damage or bodily injury. Additionally, car insurance can assist you in meeting any minimal coverage standards imposed by your state or a lender.
On this page, we’ll discuss some of the most popular types of auto insurance and provide advice on how to determine how much protection you require and locate the lowest-priced policies available.
If you’re in a car accident or if your vehicle is damaged in a non-collision event (like a falling tree or hail), car insurance protects you financially. or someone steals your car. The insurer will cover covered expenses in return for a premium, which is the amount you pay for your policy. This may include property damage or bodily injuries you or another driver or passenger sustained, depending on the type of policy you select.
Limits, or the maximum amount an insurance company will pay out for a claim, are the foundation of every policy. A few sorts of inclusion likewise convey deductibles, or the sum you need to pay before the safety net provider will take care of residual expenses.
There are a number of different kinds of auto insurance, and you can customize a policy to get the coverage you need.
Costs incurred as a result of an accident for which you are found legally responsible are covered by liability insurance. There are typically two types of coverage included in liability insurance:
harm to the body: When you are at fault, this covers the costs associated with injuries or deaths of others (such as another driver, their passengers, or a pedestrian).
Damage to property: This covers the cost of repairing or replacing someone else’s property (like a home, fencing, etc.). you damage while driving your car.
Most states expect drivers to convey a base measure of risk inclusion before they can enlist and work a vehicle in that state. Visit your state’s Department of Motor Vehicles (DMV) or browse our Auto Insurance by State guide to determine your required liability coverage.
Uninsured Motorist Coverage
If the other driver doesn’t have auto insurance and you are wounded in an accident, uninsured motorist coverage offers financial security. This insurance may also cover property damage depending on where you live. If you are the victim of a hit-and-run, uninsured motorist coverage also pays.
You could be required by your state to have a certain minimum level of uninsured motorist coverage. Consider underinsured motorist protection as well, which often pays the difference between your costs and the at-fault driver’s policy limit. However, unless your underinsured motorist limits are higher than the liability limits of the other driver, underinsured motorist coverage may not be applicable in some states.
Personal Injury Protection (PIP)
This insurance, sometimes known as “no-fault” coverage, covers your medical costs and those of your passengers in the event that you or they are hurt in an accident, regardless of who is at blame. If you are on a bike and are struck by a car, PIP can also apply. When appropriate, PIP coverage may pay for tasks like housecleaning that you are unable to complete while healing, as well as lost wages.
PIP is typically not required and is not offered in every state. However, certain jurisdictions, including Texas and New York, mandate that drivers have PIP. As always, confirm whether PIP is offered in your state and whether you are required to carry it by contacting the DMV.