In today’s world, auto insurance is a fact of life. Almost everywhere in the United States, forty seven states to be exact) it is also the law. At times the many types of coverage available and corresponding terminology may seem confusing. Taking the time to learn the basics will make the process of choosing your auto insurance a whole lot easier.

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Liability Insurance

A good place to start is with liability insurance. There are two types of liability insurance: bodily injury liability and property damage liability. It is essential to carry a liability policy to protect you in the event of an accident where you injure another person or damage someone else’s property.

Bodily injury liability pays the hospital and medical expenses of the injured parties, and also covers their lost income and even pain and suffering judgments. Property damage liability covers the cost of any property you might damage in an accident, such as another person’s vehicle, home or mailbox.

Liability insurance will also pay for your legal defense should you need one. It is generally quoted in two amounts. The first number is the limit of medical payments awarded to a single person per incident and the second is the maximum amount that will be paid out to all injured parties for a single occurrence.

Liability insurance is required by law in most states and is the most important insurance you can carry. It could save you from financial ruin in the event you become involved in an accident where someone is injured.

Collision Insurance

While liability protects you against the costs of injury or property damage to others, Collision insurance will cover the cost of damage to your own vehicle if you are in an accident. If you carry collision insurance, your car is covered, no matter who is at fault.

Comprehensive Insurance

Cars can be damaged by many things besides accidents. For all other causes of damage, comprehensive auto insurance is a valuable protection. A comprehensive policy covers the cost of damage to your vehicle due to causes such as theft, fire, vandalism, windstorms, hail, and floods.

Medical Payments Insurance and Personal Injury Protection (PIP) Insurance

Sadly, accidents may cause you injuries requiring medical treatment. To be prepared for such an event, medical payments insurance and personal injury protection (PIP) insurance will help protect your assets. Medical payments insurance covers medical, hospital and funeral expenses resulting from an accident for both you and your passengers, no matter who is at fault. This insurance also protects you when you are driving another person’s car, as long as you have their permission. PIP insurance is a broader coverage and pays for medical care, lost wages and even replacement services for you and your passengers.

Car Rental Insurance

One of the most annoying inconveniences after an auto accident is trying to manage without a car while repairs are being performed. Car rental insurance can help ease the financial burden of renting a car until you have your vehicle back in running order. Most policies will pay $15.00 per days for thirty days. While this won’t cover the entire cost of most rental cars, it is enough to make a valuable difference

 

 

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