Auto insurance coverage is required by law in the United States of America. The minimum coverage differs from state to state. If you do not own auto insurance, you can be severely penalized and the penalties can vary from a minor fine to a jail sentence if you are involved in an accident.
The most basic type of auto insurance policy is third party insurance coverage or personal injury protection. It is a coverage which will provide for all the losses sustained by the other party involved in the accident, but not for your losses. And it is also required that you are the party at fault in the accident. It will not cover you if there is no proof that you are the party at fault. Normally, the other party will litigate in order to prove your fault in the accident. This is natural given that no one will be willing to volunteer that he or she was at fault in an accident. But do be aware that if it is proved that you were the party at fault, your insurance company will end up paying even for the litigation. And consequently your premium will go up even more.
The other type of auto insurance policy is the first party fully comprehensive insurance policy. This will cover both your damages as well as the damages sustained by the other party. And it is not required to show fault in order to claim for damages in such an accident. In fact, it is normal for people to request their respective insurance companies to pay for their personal damages in case both of them have first party insurance policies. It will also cover you against losses sustained due to theft, acts of vandalism and other natural disasters.
Another midway insurance policy is the limited fire and theft policy. This will not cover your damages in an accident. It is for all practical purposes, a third party insurance policy. But it will provide for losses sustained due to fires, natural disasters like floods, blizzards, earthquakes, and tornadoes. You will also be provided for the losses due to theft, and also damage by vandals.
Collision coverage is required for accidents which occur on the highway or on the road in general. It does not cover any loss due to accidents which do not involve another moving car. It can be added to any third party insurance policy. It is not required if you are not going to be driving on the freeway or if you are going to keep your car parked for a long duration of time.
Medical benefits are added medical advantages that are available to policy holders. It can cover medical costs such as prescription medication, and other long term treatments which will not be covered by a simple auto insurance policy.
You can also look for rental insurance if you are going to travelling out of your city and renting cars. This will enable you to avoid buying rental insurance from your rental company. If you do meet with an accident while driving the rental car, you can use your personal car insurance to cover for the damages. This is a very good idea if you are a frequent renter, as it will save you at least 30% of the renting cost.
