Auto policy provides place, liability and medical coverage :
- Property coverage pays for damage to, or theft of, the car.
- Liability coverage pays for the policyholder’s legal responsibility to others for bodily injury or property damage.
- Medical coverage pays for the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses.
Most states require drivers to have car indebtedness insurance before they can legally drive a car. ( Liability policy pays the other driver ’ s medical, car animate and other costs when the policyholder is at fault in an car accident. ) All states have laws that set the minimum amounts of insurance or other fiscal security drivers have to pay for the damage caused by their negligence behind the wheel if an accident occurs. Most car policies are for six months to a year. A basic car insurance policy is comprised of six different kinds of coverage, each of which is priced individually ( see below ) .
1. Bodily Injury Liability
This coverage applies to injuries that the policyholder and family members listed on the policy lawsuit to person else. These individuals are besides covered when driving other peoples ’ cars with permission. As motorists in serious accidents may be sued for big amounts, drivers can opt to buy more than the state-required minimum to protect personal assets such as homes and savings.
Reading: Auto Insurance Basics
2. Medical Payments or Personal Injury Protection (PIP)
This coverage pays for the discussion of injuries to the driver and passengers of the policyholder ’ sulfur car. At its broadest, PIP can cover medical payments, lost wages and the price of replacing services normally performed by person injured in an car accident. It may besides cover funeral costs .
3. Property Damage Liability
This coverage pays for damage policyholders ( or person driving the car with their license ) may cause to person else ’ s place. normally, this means wrong to person else ’ s car, but it besides includes price to lamp posts, call poles, fences, buildings or other structures hit in an accident.
This coverage pays for price to the policyholder ’ randomness car resulting from a collision with another car, object or as a resultant role of throw over. It besides covers damage caused by potholes. Collision coverage is by and large sold with a deductible of $ 250 to $ 1,000—the higher the deductible, the lower the premium. even if policyholders are at fault for an accident, collision coverage will reimburse them for the costs of repairing the car, minus the deductible. If the policyholder is not at mistake, the indemnity company may try to recover the measure it paid from the other driver ’ south policy party. If the company is successful, policyholders will besides be reimbursed for the deductible.
This coverage reimburses for loss due to theft or damage caused by something other than a collision with another cable car or object, such as fire, falling objects, missiles, explosions, earthquakes, windstorms, hail, flood, vandalism and riots, or reach with animals such as birds or deer. comprehensive examination insurance is normally sold with a $ 100 to $ 300 deductible, though policyholders may opt for a higher deductible as a way of lowering their premium. comprehensive insurance may besides reimburse the policyholder if a windshield is cracked or shattered. Some companies offer distinguish glass coverage with or without a deductible. States do not require the purchase of collision or comprehensive examination coverage, but lenders may insist borrowers carry it until a car lend is paid off .
6. Uninsured and Underinsured Motorist Coverage
Uninsured motorist coverage will reimburse the policyholder, a member of the family or a designated driver if one of them is hit by an uninsured or a hit-and-run driver. Underinsured motorist coverage comes into meet when an at-fault driver has insufficient policy to pay for the early driver ’ s total loss. This coverage will besides protect a policyholder who is hit while a pedestrian .