Understanding Your Car Insurance Policy

Many factors are involved in creating an auto insurance policy. In light of this, understanding auto insurance can be difficult and overwhelming for many consumers. However, it is necessary for consumers to understand enough to realize if they are properly insured. Factors involved in creating a car insurance policy include liability coverage, coverage for the automobile, optional and additional coverage and deductibles. While each state mandates its own insurance regulations, nearly all states in the United States require drivers to have auto insurance.

Liability Coverage

Liability car insurance coverage can be broken down into three parts and is most frequently required for every insured driver across the nation. Bodily injury liability insurance protects the other driver involved in an accident if you are at fault. Property damage liability covers damages that you cause to another person’s property and uninsured motorist coverage is essentially liability coverage that protects the insured person in the event that they are in an accident where the other driver does not have auto insurance. Additionally, uninsured motorist coverage protects the insured in the event they are the victim of a hit and run accident.

Coverage for your Car

There are two types of car insurance coverage available to protect your car: collision coverage and comprehensive coverage. Collision coverage is appropriately named as it is designed to pay for physical damages sustained to your car by colliding with some object, such as another car or a tree. Comprehensive coverage pays for damages that are caused by pretty much everything else. Some examples of the types of damages covered by comprehensive coverage are fire, theft, acts of weather, broken glass, etc.

No Fault Systems Liability Coverage

Under a no-fault system, common in many states, there are two additional types of liability insurance. Personal injury protection pays your friends or relatives that were present in the vehicle during an accident, regardless of who was at fault. Residual bodily injury liability coverage protects family members or anyone who was riding in the vehicle with you if you end up being sued.

Optional Coverage

Many drivers want the maximum amount of car insurance protection if they are involved in an automobile accident. Fortunately, there are additional options for coverage that can help pay for other expenses such as, medical payment coverage, and rental reimbursement coverage and towing or emergency road service coverage. Medical payment coverage pays for final expenses or medical expenses for yourself and others in or driving your vehicle. Rental reimbursement coverage pays for a rental car as needed, however, there is usually a maximum benefit. Towing pays the cost of towing the car to a repair shop.

Understanding car insurance can be confusing for many people, but once it is understood, it really is not that difficult. Liability coverage protects the other vehicle and driver if the insured person causes the accident or damage. Liability coverage also protects the driver in the event that the other party is not insured. Additionally, coverage can be purchased to protect the insured person’s automobile, family and passengers, medical expenses, car rental fees and towing or roadside assistance.

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