Auto insurance is a service provided by various insurance companies that protects your financial security in case of your involvement in an accident. Auto insurance is not made mandatory by the federal government. However, most states, barring a few, have made minimum auto insurance the law. The only states that have not made auto insurance mandatory are Wisconsin and New Hampshire. These states have financial responsibility laws. Financial responsibility laws are different from mandatory insurance requirements.
An insurance policy is not needed if you want to be driving on New Hampshire roads. However, you must be able to show that you have sufficient funds to pay for damages. In the case of not being able to show proof of sufficient funds, a person is required to have an auto insurance policy. Even though it is not required by law, having auto insurance is advised.
Auto insurance is comprised of six basic divisions or coverage. These include Bodily Injury Liability, Property Damage liability, PIP or personal injury protection policy, Collision, Comprehensive and Uninsured or Underinsured motorist’s coverage.
Liability is the most basic coverage and is mandatory in many states. This is the main reason why people go in for insurance. This is the coverage that gives the maximum protection among all the coverage.
If you are in an accident and it has been determined that it was your fault that caused the accident, you are now responsible for the accident. You will have to pay for damages. This is where your auto insurance company will pay for your damages. The bodily injury liability pays for damages to nay bodily harm you might have caused. These include medical bills of the injured and compensation for any lost wages. Liability also covers any property damage through the property damage policy. This would cover any damage to the vehicles involved and would cover replacement as well, if needed. However,
if there has been any damage to buildings, fences or light poles, the property damage will cover that as well. Property damage covers any damage you might have caused to any property. Many times minimum insurance coverage is not enough to cover the costs of all of the damage. A serious accident might occur and you might be found responsible. In this case, you insurance might not cover all the damages. In many states the injured have the right to sue the person responsible. IF this happens your personal finances and saving will take a hit. It is always a better idea to go for higher insurance than the bare minimum the government expects.
Collision coverage is the coverage that helps to repair your vehicle in case of an accident. In most cases however, you can only collect the cash value of the car which is not enough for a replacement. This is the more expensive component of your entire auto insurance policy.
Comprehensive coverage will cover costs incurred by your car when it was not in an accident. These include any damages caused by theft, vandalism, natural elements like fire, rain or hail. In many cases hitting a deer qualifies as well.