Skip to main content

How does car insurance work?

 

               How does car insurance work?


How does car insurance and auto insurance coverages work.

Car insurance provides financial protection for drivers in case of an accident, vehicle damage, personal injury or theft. Without car insurance, drivers would be at serious financial risk every time they drive their car because collisions can cost thousands of dollars in property damage and bodily injuries. Auto insurance is something that everyone needs but few people feel confident that they fully understand how does car insurance work.

Various types of car insurance coverage work slightly differently, depending on which driver is found to be at fault, what type of damage is caused, and what state the accident occurs in.

An auto insurance policy is a contract between you and your auto insurance carrier. In exchange for your paying a premium, your insurance company agrees to pay your losses as outlined in your policy.

What are the types of car insurance and what do they cover?

What is covered depends on your coverage. The first thing to do when trying to get a clearer understanding of what your insurance policy covers is to identify what type of coverage you have. There are main types of car insurance, depending on the state:

Bodily injury liability insurance

Bodily injury liability insurance protects you if you’re liable for the damage to another driver’s vehicle in an accident. This type of coverage is required in almost every state.

Property damage liability insurance

Property damage liability coverage or insurance covers damage that you cause to other people’s property with your car. It is required in most states.

Collision Insurance

Collision insurance covers the repair or replacement of your vehicle, less your chosen deductible, no matter who is at fault in an accident. It is optional, but most lienholders require owners purchase collision insurance if you lease or finance your vehicle.

Comprehensive Insurance

Comprehensive insurance covers damage to your vehicle, less your chosen deductible, that was not caused by an accident. Examples include: rodent damage, fallen limb coverage, and more. It is optional coverage.

Personal injury protection (PIP) insurance

Personal injury protection insurance pays for direct and indirect medical bills if you’re involved in an accident, regardless of who is at fault. It is required in some states.

Uninsured/underinsured motorist coverage

Uninsured/underinsured motorist coverage pays property damage and medical bills after an accident with an uninsured or underinsured driver. This type of insurance is required in nearly half of all states.

Medical payments (MedPay) coverage

Medical payments coverage helps pay for your medical related expenses after an accident. It is required in some states.

Gap insurance

Gap insurance helps drivers pay off the rest of their car loan if their vehicle is totaled or stolen. It is optional.

Roadside assistance

Roadside assistance coverage reimburses you for services like towing and flat-tire replacement. It is optional.

Rental reimbursement

Rental reimbursement covers the cost of a rental car while your damaged car is being repaired after a collision. It is optional.

Comments

Post a Comment

Popular posts from this blog

My car caught on fire! Does my car insurance cover it?

Image
  My car caught on fire! Does my car insurance cover it? The freeway carbecue, a car caught on fire while parked at home or damages caused by a wildfire are all scenarios that may leave you wondering how your car insurance can help. While events like these are unplanned and unpredictable, having a better understanding of how your policy might help will make you better prepared - even for the unknown. We’ll share how with the right coverage, your vehicle may be covered from fire damage. And as a helpful bonus, we’ll pass along some safety tips that can help you stay safe in the event your car does go up in smoke. Car insurance coverage for fire damage Although we hope you haven’t had any experience with fire outside of s’mores with friends, we know that an unexpected car flame can spark at any time. For car fires that aren’t the result of an accident, like a mechanical malfunction, Comprehensive coverage is your go-to for covering car losses that are caused by fire. Here are more s...
Read more

What to Consider When Getting an Auto Insurance Quote

Image
  What to Consider When Getting an Auto Insurance Quote These days, an agency that doesn’t offer a free car insurance quote online is in the minority. But just because it’s easy and free to get a quote doesn’t mean you’re getting the best quote. And it definitely doesn’t guarantee you’ll be saving money. The fact is the number of things that affect a quote vary and can include things like the type and quality of coverage being offered, your driving record and what kind of customer service you can expect. A one-size-fits-all mentality isn’t going to serve you well if you’re trying to get the best quote to meet your needs. That’s why understanding what factors impact rates is key, if you want the best auto insurance coverage from the best insurance agent. Let’s dive into a few of the things you should consider when getting an auto insurance quote. Your Driving Record Perhaps the most obvious thing to consider when look...
Read more

Shopping for Car Insurance though Geico

Image
  Shopping for Car Insurance - How to Get the Best Deals When comparing car insurance rates online or over the phone, make sure you're looking at similar policies to accurately compare rates. With a 97% customer satisfaction rate*, why not start with GEICO? Here's what you need to know about 1. Gather the information you need to shop for a car insurance quote. The first step in shopping for car insurance is to get a quote. To get an accurate car insurance quote, you'll need to provide some basic information. In addition to your name, address, and date of birth, some questions you may be asked include: Type of vehicle and how you use it Any other drivers that will be on the policy Education and profession Auto insurance history Accident history Not sure about something? You can always save your quote at any step and come back later. 2. Determine how much coverage you need. When shopping for the best car insurance, make sure you'r...
Read more