Auto Insurance: Understanding the Important Aspects of Your Vehicle Protection and Coverage

Auto insurance is a type of vehicle insurance that provides protection against accidents or damage to your vehicle. It gives you financial protection for your vehicle, and may also cover a portion of the cost of repairing or rebuilding it. If your vehicle is damaged in an accident, you can make a claim with your insurance company to receive financial assistance.

What does my auto insurance cover, and under what circumstances?

Your auto policy will protect you and other family members on your policy, whether you are driving your own car or someone else’s car with their permission. It will also cover someone who is not on your policy but is driving your car with your consent. Your personal auto policy will only cover personal driving, such as commuting to work or running errands. It will not cover if you use your car for business purposes, such as delivering pizzas. Personal auto insurance also will not cover you if you use your car to provide transportation to others through a ride-sharing service such as Uber or Lyft. However, some auto insurance companies now offer additional insurance products at an additional cost that extend coverage for vehicle owners providing ride-sharing services.

Is auto insurance coverage mandatory?

Auto insurance requirements vary from state to state. If you are financing a car, your lender may also have its own requirements. Almost every state requires car owners to have the following coverages:

  • Bodily injury liability insurance: This coverage pays for expenses incurred if you or another driver is injured or killed in an accident while you are driving your car.
  • Property damage liability insurance: This coverage pays for damage you or another driver causes to another vehicle or other property, such as a fence, building, or utility pole, while you are driving your car.

What types of auto insurance coverage are there in general?

Although most legally required auto insurance covers damage caused by your vehicle, it does not cover damage to your own vehicle. To cover your vehicle, you should consider the following optional coverages:

  • Collision coverage: This coverage pays for damage that results from your vehicle colliding with another vehicle or another object, such as a tree or guardrail, when you are at fault. Collision coverage will not pay for mechanical breakdown or normal wear and tear on your vehicle, but it will cover damage caused by potholes or if your vehicle overturns.
  • Comprehensive coverage: This coverage pays for theft and damage caused by events outside of your control, such as fire, flood, vandalism, hail, falling rocks or trees, and other perils—even being struck by a meteor!
  • Glass coverage: This coverage pays for damage to glass, which is common. Some auto policies include a deductible on glass coverage, which covers side windows, rear windows, and glass sunroofs. You can also purchase additional glass coverage.

In addition to these common coverages, there are many other types of auto insurance available, such as uninsured/underinsured motorist coverage, medical payments coverage, and rental car reimbursement. It is important to discuss your needs with an insurance agent to determine which coverages are right for you.

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