Auto insurance

Why auto insurance is important?

"Since commercial vehicles help generate a source of income, any accidental damage or loss from such vehicles could simply be a major financial loss to you, your family, or your business. In severe cases, it could also mean loss of business. Therefore, commercial auto insurance is an indispensable tool for managing risk".

Why auto insurance is important?

What is auto insurance?

Most states require basic personal auto insurance and provide you with some financial protection in the event of an accident. But is it enough? What are the options? Learn how auto insurance works and what types of coverage are available.

The Basic :  Understanding Auto Insurance 

Auto insurance is a contract between you and the insurance company that protects you against financial loss in the event of an accident or theft. In exchange for paying a premium, the insurance company agrees to pay your losses as described in your policy.

Auto insurance provides coverage for:

Property - such as damage or theft of your car
Liability: Your legal liability to others for bodily injury or property damage
Medical: The cost of injury treatment, rehabilitation, and sometimes loss of wages and funeral expenses

Most U.S. states require basic personal auto insurance, and the laws vary. Auto insurance coverages are individually priced (a la carte) so you can customize coverage amounts to meet your exact needs and budget.

Policies are generally issued for periods of six months or one year and are renewable. The insurance company sends a notice when it is time to renew the policy and pay your premium.

Who is covered by my auto insurance and under what circumstances?

Your auto policy will cover you and other family members on your policy, whether you drive your car or someone else's (with your permission). Your policy also provides coverage if someone who is not on your policy drives your car with your consent.

Your personal auto policy only covers personal driving, whether you are commuting, running errands, or taking a trip. It will not provide coverage if you use your car for commercial purposes, for example if you deliver pizzas.

Personal auto insurance will also not provide coverage if you use your car to provide transportation to others through a shared ride service like Uber or Lyft. However, some auto insurers now offer supplemental insurance products (at additional cost) that extend coverage for vehicle owners who provide 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 all states require car owners to carry:

Bodily Injury Liability - Covering the costs associated with injury or death that you or another driver cause while driving your car.

Property Damage Liability - Reimbursing others for damage you or another driver who drives your car causes to another vehicle or other property, such as a fence, building, or utility pole.
Additionally, many states require that you carry:

Medical Payments or Personal Injury Protection (PIP), which provides reimbursement of medical expenses for injuries to you or your passengers. It will also cover lost wages and other related expenses.

Uninsured motorist coverage reimburses you when an accident is caused by a driver who does not have auto insurance, or in the event of a hit and run. You can also buy with insured motorist coverage, which will cover costs when another driver does not have adequate coverage to pay the costs of a serious accident.

Even if PIP and uninsured motorist coverage are optional in your state, consider adding them to your policy for added financial protection.

What other types of auto insurance coverage are typical?

While the most basic and legally binding car insurance covers damage to your car, it does not cover damage to your own car. To cover your own car, you should consider these optional coverages:

The collision reimburses you for damage to your car that occurs as a result of a collision with another vehicle or other object, such as a tree or railing, when you are at fault. While collision coverage will not reimburse you for mechanical failure or normal wear and tear on your car, it will cover damage caused by potholes or rolling your car.

Integral provides coverage against theft and damage caused by an incident other than a collision, such as fire, flood, vandalism, hail, falling rocks or trees, and other hazards, including being struck by an asteroid!

Glass coverage provides coverage against damage to the windshield, which is common. Some auto policies include glass coverage with no deductible, which also includes side windows, rear windows, and glass sunroofs. Or you can buy a supplemental glass cover.

What is gap insurance and do I need it?

Collision and comprehensive only cover the market value of your car, not what you paid for it, and new cars depreciate quickly. If your car is totaled or stolen, there may be a "gap" between what you owe on the vehicle and your insurance coverage. To cover this, you may want to consider buying gap insurance to pay the difference. Please note that for leased vehicles, gap coverage is generally included in your lease payments.

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