What is auto insurance?

You might wonder what is auto insurance for and who needs it. Auto insurance provides coverage for property damages, medical expenses, and liability. What your auto insurance policy covers depends on what types of auto insurance you buy.

We’ll explain what you need to understand everything about auto insurance, including the main coverages and how to find the best car insurance rates. If you want to find and compare online auto insurance quotes for free, check out our free quote comparison tool.

Main Types of Auto Insurance Coverage Explained

The definition of auto insurance is: financial protection against accidents, theft, or natural disasters. Auto insurance definition refers to an agreement between the owner of a vehicle and their insurance company.

To define auto insurance further, several types of coverage such as liability, collision, and comprehensive are offered by insurers. Understanding car insurance is crucial for making confident choices about coverage and costs.

So, what does auto insurance cover? The most common auto insurance policies contain six types of coverage. States have different requirements for coverage, and a few don’t require it at all. When you finance a vehicle, the lender may also levy certain requirements for coverage.

Most auto policies are purchased for periods of six months to one year. You will be notified by your auto insurance company when it’s time to renew your policy, in addition to being billed for the premium.

There are six main types of auto insurance coverage. The most basic type is liability only insurance, which protects you if you get in an at-fault accident. Normally, you can only get just liability auto insurance coverage when you own your vehicle outright.

When you compare car insurance, consider the different types of coverage, policy limits and exclusions, deductibles, and customer service track record. Receiving quotes from multiple car insurance organizations will show that each company has their own strengths. Researching many car insurance policies can help you decide what plan features you prioritize.

If the vehicle is financed, the lender and the insurance company will most likely require you to have full coverage car insurance. A full coverage auto insurance policy may include six types of coverage or some combination thereof. You may need to contact your car insurance org or lender to inquire if this is required for your vehicle.

Auto Insurance Explained

When looking for a comprehensive car insurance explanation, you must understand what influences auto insurance rates. Explaining automobile insurance includes acknowledging that rates are based on factors such as your driving and credit history, vehicle make and model, and your location.

Insurance orgs offer various plans, typically offering discounts for bundling policies and safe driving habits. Shopping around with different companies can help you find the best rates for your needs.

Property Damage Liability Car Insurance Coverage

Even with a minimum coverage auto insurance policy, it’s good to have liability coverage. Property damage liability coverage pays for damage to someone else’s property caused by your vehicle, whether you are driving it, or someone else is driving it with your permission. In vehicle accidents, this usually means someone else’s car is damaged.

However, this coverage also includes damage to other types of property, both private and public, like fences, guardrails, telephone poles, homes or other buildings, or any other structures your car may have hit. Read more about the best property damage liability auto insurance companies.

Bodily Injury Liability Car Insurance Coverage

Bodily injury liability auto insurance covers injuries caused to someone else either by the policyholder, or any other family member included on the policy. It applies whether the injury is caused when you are driving your own vehicle, or you’re driving someone else’s vehicle with their permission.

It’s important coverage to include in an auto policy because, in the event of a serious accident, the other party may sue you for damages. Many states have minimum requirement laws for this coverage, but you may want to consider increasing the amount of coverage in your policy to protect your assets in case of litigation.

Comprehensive Car Insurance Coverage

You may be wonder, “what is an auto insurance policy that contains comprehensive coverage?”. Comprehensive coverage (definition: auto insurance that covers damage that is not caused by a collision) is the first type of policy we will cover.

With comprehensive auto insurance, you will be reimbursed if your car is stolen, or if it’s damaged by something other than an accident with another vehicle. Natural disasters like tornadoes or earthquakes, hail, falling objects, vandalism, fire, or colliding with animals such as deer or birds can cause damage ranging from a few dings to total loss.

In addition, if your windshield cracks or shatters, comprehensive insurance will cover it. Glass coverage may be provided with or without a deductible, depending on the company. Comprehensive coverage usually carries a deductible of $100 to $300, but it is possible to select a higher deductible, thereby lowering your premium.

Collision Car Insurance Coverage

As the name states, this collision auto insurance pays if your vehicle is damaged as a result of colliding with another car or object, or if your car flips over. It also pays for damage caused by potholes.

If you’re at fault in an accident, collision coverage will pay for the cost of repairing your vehicle, minus the deductible.

Collision insurance usually carries a deductible of $250 to $1,000, and as with other auto insurance coverages, the higher the deductible, the lower your premium.

If you’re not at fault, your collision coverage will still pay to have your car repaired, but you still have to pay the deductible. Your insurance company may try to recoup the cost of repairs from the at-fault driver’s insurance company.

If they’re able to do so, you will be reimbursed for your deductible.

Medical Payments or Personal Injury Protection (PIP) Car Insurance Coverage

If you or any passengers in your vehicle are injured in an accident, personal injury protection auto insurance will pay for treatment.

In some cases, a PIP may extend to further medical costs like rehabilitation, and may also cover other expenses resulting from accident injuries such as lost wages, and even funeral costs.

Uninsured/Underinsured Motorist Coverage

If you or anyone else permitted to drive your vehicle is involved in an accident caused by an uninsured or hit-and-run driver and submit an auto insurance claim, this coverage will reimburse you for damage to your vehicle.

It will also cover you if the other driver does not have sufficient insurance coverage to pay for the total loss of your vehicle. This coverage also protects you if you are hit by a vehicle as a pedestrian.

Understanding How Auto Insurance Policies Work

The meaning of auto insurance can be emphasized in its role as a financial safety guard against unexpected events. This protection plays a vital role in preventing severe financial hardship for car owners. The definition of car insurance includes multiple kinds of protections such as liability, collision, and comprehensive insurance.

Looking deeper into the meaning of car insurance, it becomes apparent that it is a legal requirement for many vehicle owners. However, understanding automobile insurance involves also acknowledging that for most people, it is also part of responsible vehicle ownership.

Car insurance means ensuring that you have adequate protection for your needs. Comparing auto insurance is the best way to find the policy suitable for you. After comparing quotes from different auto insurance companies, you should then consider available features or discounts.

Hopefully, now you understand all the details of what is auto insurance and just how important it can be. Driving without auto insurance is illegal in most states, so ensure you have the coverage necessary to drive legally. Comprehensive insurance policies should be considered in states that require it.

Compare auto insurance quotes for the coverage you need with our free online quote comparison tool.