Auto insurance is insurance for all kind of vehicles e.g. car, trucks.
If you own a vehicle, you need to get it insured as auto insurance is a legal necessity. Auto insurance protects you against financial loss if you have an accident.
Auto insurance policy basically includes the following six coverages:
1. Bodily Injury Liability
This coverage applies to injuries that you, the designated driver or policyholder, cause to someone else. You and your family members listed in the policy are also covered when driving someone else’s car with their permission. In the latter case, the coverage is given to you only if the injury is caused by you. It also covers legal costs that you may incur.
2. Personal Injury Protection (PIP)
This coverage pays for the treatment of injuries to the driver and passengers of the policyholder's car. It is also sometimes known as “no-fault” coverage.
3. Property Damage Liability
This coverage pays for damage you may cause to someone else's property. E.g. another vehicle and neighbor’s mailbox or fence.
4. Collision
This coverage pays for damage to your vehicle resulting from a collision with another vehicle or object. It includes a deductible amount which may vary from state to state. If you are at fault your collision coverage will reimburse you for the costs of repairing your car, minus the deductible. If you're not at fault, auto insurance company may try to recover the amount they paid you from the other driver’s insurance company. If successful, you'll also be reimbursed for the deductible.
5. Comprehensive
This coverage reimburses you for loss due to theft or damage caused by something other than a collision with another car or object, such as fire, falling objects, explosion, earthquake, flood or contact with animals.
6. Uninsured and Underinsured Motorist Coverage
This coverage will reimburse you, a member of your family, or a designated driver if one of you is hit by an uninsured driver.
The auto insurance policy is a contract between you and the insurance company.
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