Automobile owners needs auto insurance. Insurance is an agreement with another party to protect you and other drivers financially. You are responsible for paying a premium and the insurance company will bear the financial burden as outlined in your particular agreement.
Most states mandate that drivers must purchase a specific amount of insurance coverage. The amount and type of coverage varies from state to state. If there is a loan on the vehicle, most financial institutions require owners to purchase additional coverage that will pay the loan if you damage or total the vehicle.
The most common types of car insurance include property damage, bodily injury, comprehensive coverage, collision and uninsured motorist. An insurance policy may include some or all of these riders. The term liability insurance includes three specific types. Liability does not pay the cost of your expenses. It covers only the other vehicle and its passengers.
Insurance companies express the dollar amount of liability coverage in terms agreed on in the policy such as 25/50/25. That means it would pay a maximum of $25,000 for bodily injury for one person. It would pay a maximum of $50,000 for bodily injury in a single accident and up to $25,000 for property damage. Liability covers only damage or injury to other drivers if you are at fault.
Collision covers your auto damage regardless of who is at fault in an accident. Comprehensive covers damage caused by other factors including weather, animals and theft. Most policies have a pre-determined deductible that you pay before the insurance starts paying. Uninsured motorist pays for damage to your vehicle if the other driver is at fault and uninsured. You can add tow, rental and roadside service to your existing policy.
The purpose of auto insurance is to protect everyone on the roads. It can divert financial ruin by helping to pay for property and bodily damage. It can help with lost wages and survivor benefits. If someone does file a lawsuit against you, your insurance company has attorneys to help fight or settle the case in arbitration.