Legally, every car owner in United States must be covered under some type of auto insurance as stated by the Department of Motor Vehicles or DMV. This protects the owner of the car against damage to himself or his car, as well as protects other people from damages he may inadvertently cause.
Auto Insurance Coverage determines the obligations and the responsibilities of a person who insures a car (a policy holder). This defines what happens what happens in case there is damage to his car, his car is stolen, or he is involved in a car accident (which may or may not be his fault).
Definitions:
Property Coverage: this describes the amount of coverage available to a policy holder whose car was damaged in an accident, or through other means, such as vandalism. It also includes the theft of his car. Obviously this is an option every car owner should want to obtain.
Liability Coverage: this defines the coverage the insurance company provides for the policy holder when he is involved an accident and causes bodily or property damage to someone else. By having this option, the policy holder is protected, as defined by his policy, from the financial costs.
Medical Coverage: this term defines how much money the insurance company would be willing to pay for injuries and necessary hospitalization that were sustained during an accident, as well as the costs of rehabilitation afterward. At times it may also include wages that were lost by the injured person while he is incapacitated.
The next few items are standard policies:
Auto insurance policies can be classified into multiple categories. Each exists to compensate for damage or loss sustained, and expenses incurred, in cases of property damage or injury. Several examples:
Third Party: this is the bare minimum policy a car owner must possess in order legally comply with US laws. Unsurprisingly, it is also the cheapest car insurance available. Put simply, this plan protects the policy owner in case he accidentally damages someone or their property.
Fire and Theft: this type of policy offers more protection to the policy holder, and will cover the cost of a car that is burnt or is stolen. Note that it does not cover any damages incurred if involved in a car accident.
Collision: this type of policy covers the cost of repairs to a car when the policy holder is liable for the accident. Basically, if you cause the accident, you still get paid for repairs if covered by this type of insurance.
Personal Injury Protection (PIP) or Medical Payments (MedPay): this policy protects the driver and any passengers that were in his car during a car accident, by reimbursing them for medical bills and lost wages. Note that the question who caused the accident is irrelevant for this policy.
Comprehensive: this is the best type of auto insurance and the most expensive one as well. It offers virtually all protections to the policy holder ranging from accidents, medical bills (at least partially), fire damage, theft, and even natural disasters ("acts of god"). It even partially covers the cost of items stolen from a car!
The following are specialized policies:
There are many types of special auto insurance plans, for special scenarios. Here are several examples.
Classic car insurance: this policy targets owners of antique cars (cars that are older than 25 years), and is equivalent to a comprehensive car insurance. There are usually extra conditions in the policy, such as a limit on the number of miles the car owner may drive in a year's time.
Rental Reimbursement: this type of policy simply insures a policy holder in case his car is unavailable - he is given a replacement rental car for this period.
Even if you have the best and most expensive auto insurance policy, it is crucial you are familiar with all the fine print, as you don't want to have unpleasant surprises when the time comes. For example, when a car is stolen, some insurance plans only cover 80% of the cost of a new car (this aims to prevent fraud by car owners who wish to get rid of their cars).
Auto Insurance Coverage determines the obligations and the responsibilities of a person who insures a car (a policy holder). This defines what happens what happens in case there is damage to his car, his car is stolen, or he is involved in a car accident (which may or may not be his fault).
Definitions:
Property Coverage: this describes the amount of coverage available to a policy holder whose car was damaged in an accident, or through other means, such as vandalism. It also includes the theft of his car. Obviously this is an option every car owner should want to obtain.
Liability Coverage: this defines the coverage the insurance company provides for the policy holder when he is involved an accident and causes bodily or property damage to someone else. By having this option, the policy holder is protected, as defined by his policy, from the financial costs.
Medical Coverage: this term defines how much money the insurance company would be willing to pay for injuries and necessary hospitalization that were sustained during an accident, as well as the costs of rehabilitation afterward. At times it may also include wages that were lost by the injured person while he is incapacitated.
The next few items are standard policies:
Auto insurance policies can be classified into multiple categories. Each exists to compensate for damage or loss sustained, and expenses incurred, in cases of property damage or injury. Several examples:
Third Party: this is the bare minimum policy a car owner must possess in order legally comply with US laws. Unsurprisingly, it is also the cheapest car insurance available. Put simply, this plan protects the policy owner in case he accidentally damages someone or their property.
Fire and Theft: this type of policy offers more protection to the policy holder, and will cover the cost of a car that is burnt or is stolen. Note that it does not cover any damages incurred if involved in a car accident.
Collision: this type of policy covers the cost of repairs to a car when the policy holder is liable for the accident. Basically, if you cause the accident, you still get paid for repairs if covered by this type of insurance.
Personal Injury Protection (PIP) or Medical Payments (MedPay): this policy protects the driver and any passengers that were in his car during a car accident, by reimbursing them for medical bills and lost wages. Note that the question who caused the accident is irrelevant for this policy.
Comprehensive: this is the best type of auto insurance and the most expensive one as well. It offers virtually all protections to the policy holder ranging from accidents, medical bills (at least partially), fire damage, theft, and even natural disasters ("acts of god"). It even partially covers the cost of items stolen from a car!
The following are specialized policies:
There are many types of special auto insurance plans, for special scenarios. Here are several examples.
Classic car insurance: this policy targets owners of antique cars (cars that are older than 25 years), and is equivalent to a comprehensive car insurance. There are usually extra conditions in the policy, such as a limit on the number of miles the car owner may drive in a year's time.
Rental Reimbursement: this type of policy simply insures a policy holder in case his car is unavailable - he is given a replacement rental car for this period.
Even if you have the best and most expensive auto insurance policy, it is crucial you are familiar with all the fine print, as you don't want to have unpleasant surprises when the time comes. For example, when a car is stolen, some insurance plans only cover 80% of the cost of a new car (this aims to prevent fraud by car owners who wish to get rid of their cars).
About the Author:
Theodore Hoffstrader has been struggling for years with Auto Insurance issues, and has learned much from his trials. In this article he discussed several Auto Insurance Basics. To read more articles that will help you better comprehend Auto Insurance procedures and may save you money, visit his site, the Auto Insurance Information Highway.
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