What Is Auto Insurance?

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.

It is a part of our everyday life but, until it comes time to pay the bill each month, we rarely give it a thought. Car Insurance, however, is an essential part of our everyday lives. It is a complicated and potentially dangerous world to drive in - without insurance, that potential for danger is greatly intensified. For instance, if you are in an accident in your car but do not have insurance, you are up the proverbial creek without the proverbial paddle.

But what is car insurance? 

Well, according to Allstate Insurance (one of the leading providers of insurance in the world), car insurance is a way to “protect the people and things that are important to you.” Allstate also breaks down what insurance does for you:

 Safeguard your investment in your automobile

 Pay for medical expenses in case of an accident

 Provide financial protection from lawsuits

 Cover losses caused by uninsured or underinsured drivers

 Pay for damage due to theft, vandalism, or natural disasters

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.

An auto insurance policy is comprised of six different kinds of coverage. Most states require you to buy some, but not all, of these coverages. If you're financing a car, your lender may also have requirements.

When looking into what coverage to buy, consider your specific needs and research the different kinds of coverage and their meanings:

Liability Coverage: Protects you from damages to others if you are at fault.

Medical Payments Coverage: if bodily injury occurs, this can provide you with reasonable medical assistance.

Underinsured/Uninsured Motorists Coverage: protects you from damage caused by drivers who don’t have auto insurance or don’t carry enough auto insurance to pay for damages.

Personal Injury Protection: provides coverage for an insured person for certain reasonable and necessary expenses

Collision Coverage: helps pay to repair or replace your insured car. 

Comprehensive Coverage: helps pay for covered damages to your insured car resulting from a peril other than a collision: theft, flood, fire, or any other problem.

Once you decide on what coverage you need, you can purchase insurance; please, do not think you don’t need it-it is a foolish way of thinking. 

Even if you have never had an accident, that does not mean that everyone else on the road shares your clean record. You need to protect yourself and others. Research the insurance and then get some!

Most auto policies are for six months to a year. Your insurance company should notify you by mail when it’s time to renew the policy and pay your premium.

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