Enter Your ZIP Code

Motor Vehicle Insurance Basics


Holding an auto insurance policy is basically having a legal agreement between you, the policy holder, and your car insurance provider. Below are some types of motor vehicle insurance you should take into consideration.

Liability Insurance

Liability Insurance is one of the most frequent types of car policies available. This type of policy provides coverage to a certain amount of injury and damage to property caused by the policy holder in auto collisions. Almost every state requires car owners to obtain liability insurance. Even in states where liability coverage is not a requirement, drivers have to prove their financial responsibility before they can drive a car, and the most common type of proof is having liability policy. Under this coverage, the policy holder pays for the premiums and the company pays a certain amount for injury and damages the policy holder caused in a car accident.

When purchasing a liability policy, always make sure that all the assets you want to protect are included under the coverage. This type of insurance, however, is not enough if you use your vehicle for business and have a lot of assets to protect, such as passengers and merchandise. You might want to ask your provider about commercial motor vehicle insurance.

Now that you have learned more about the policy that protects yourself from claims, you also need to take your passengers into consideration. If your passengers are injured in an accident and it turned out to be your fault, they could file a claim against you. Always consider the personal injury and medical coverage for you and everyone else in your car.

Collision Insurance

Collision Insurance is another common type of motor vehicle insurance. If you get involved in an auto collision, this type of auto policy provides coverage for the needed repairs for your vehicle. In case the cost for repair or replacement is not within your budget, having collision coverage is an affordable way to protect yourself. You should consider your car’s replacement cost. If you are unable to afford a replacement, get collision insurance. Another favorable position of having a collision policy is having your policy cover a rental car while your damaged car is being replaced.

Comprehensive Insurance

Another common type of auto insurance is called Comprehensive Insurance. It provides coverage for damages not caused by auto collision. This includes damages by theft, vandalism, flood, fire and extreme weather conditions.

If you are a sensible and responsible car owner, you know that having your car insured is essential. However, before deciding to buy a motor vehicle insurance policy, you need to learn more about the basic types of auto insurance.