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What is Auto Insurance in America

Auto insurance protects you against financial loss if you have an accident. It is a contract between you and the insurance company. You agree to pay the premium and the insurance company agrees to pay your losses as defined in your policy.

Auto insurance provides property, liability and medical coverage:
 

  • Property coverage pays for damage to or theft of your car.
  • Liability coverage pays for your 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  
Your auto policy may include six coverage's. Each coverage is priced separately.
 
1. Bodily Injury Liability (BI)

This coverage applies to injuries that you, the designated driver or policyholder, cause to someone else. You and family members listed on the policy are also covered when driving someone else’s car with their permission.

 2. Medical Payments or Personal Injury Protection (PIP)
 
This coverage pays for the treatment of injuries to the driver and passengers of the policyholder's car.
 
3. Property Damage Liability
 
This coverage pays for damage you (or someone driving the car with your permission) may cause to someone else's property.
 
4. Collision

This coverage pays for damage to your car resulting from a collision with another car, object or as a result of flipping over. It also covers damage caused by potholes. Collision coverage is generally sold with a deductible of $250 to $1,000—the higher your deductible, the lower your premium.

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, missiles, explosion, earthquake, windstorm, hail, flood, vandalism, riot, or contact with animals such as birds or deer. Comprehensive insurance will also reimburse you if your windshield is cracked or shattered. Some companies offer glass coverage with or without a deductible. States do not require that you purchase collision or comprehensive coverage, but if you have a car loan, your lender may insist you carry it until your loan is paid off.

 6. Uninsured and Underinsured Motorist Coverage (UI,UIM) This coverage will reimburse you, a member of your family, or a designated driver if one of you is hit by an uninsured or hit-and-run driver. Underinsured motorist coverage comes into play when an at-fault driver has insufficient insurance to pay for your total loss. This coverage will also protect you if you are hit as a pedestrian.

There are also other coverage options that you may need for greater protection in case of an accident or loss. Here are some of the other types of coverage that can help meet your special vehicle insurance needs:

  • umbrella coverage: lets you extend your homeowners and auto insurance liability coverage up to $1 million or more for greater protection.
  • recreational vehicle coverage: for your all-terrain vehicle, motor home, travel trailer and more.
  • classic auto coverage: for that high value, older model special vehicle.
  • antique auto coverage for your 25 year old or more passenger car that you bring out and show off on special occasions.
  • exotic vehicle coverage for that one-of-kind , special edition or limited production car.
  • modified vehicle coverage for the unique changes you've made to your vehicle.
  • street rods coverage for that replica or older vehicle you take to car shows, events and occasionally drive.
  • motorcyles include basic models, high performance, custom bikes, etc.
  • watercraft coverage for your motor boat or sail boat, houseboat, jetski, and more.