How does Car Insurance Work?


Vehicle insurance is a must in at least forty-seven states. The main reason of this is because it is a means to insure a person involved in a vehicular accident to go back to his way of living before the accident occurred. Most car insurance companies are proficient enough to satisfy the agreements said on their policies. Each policy is different from one another based on several factors such as the type of insurance coverage you like and the kind of car you drive.

There are at least eight different types of car insurance policies each auto insurance company offers. These insurance policies may either be required by the state where you live in or it is optional.

  • Liability is a type of insurance coverage wherein a person, while driving, injures another person or damages another vehicle. This covers the medical expenses and lost wages of the persons involved in the accident besides the ones under the policy.  Some laws establish the amount of liability coverage one could purchase. However, you could always buy more.
  • Collision is a policy which pays for the damages on the vehicle under this policy. The damage should be a result of the car hitting another car or object.
  • Comprehensive covers the damages done on the car under this policy wherein the damage is due to other reasons besides colliding with another car or object. The accident may be a result of fire, hail, vandalism, theft, flood or others. 
  • Medical payments, is a policy which covers for injuries on the person or persons in the car which is under this policy. The vehicular accident should be covered by another insurance coverage for this policy to take effect.
  • Personal Injury Protection (PIP) covers for the insured driver in an automobile accident whosever fault the accident was.
  • Uninsured motorist pays for the repair of the damages acquired by an insured vehicle which is caused by a driver without liability insurance.
  • Underinsured motorist is like the uninsured motorist policy however this policy takes effect on drivers with not enough liability insurance.
  • Rental reimbursement covers for car rentals involved in a vehicular accident.

Before choosing which car insurance policy you should buy, you must first know the rules in your state. This would help you know the minimum insurance you might need for your car. However, even though your state does not require you other car insurance policies you must keep in mind that other insurance policies are also helpful. Adding another insurance policy does not mean added expense, it only implies an added protection when you’re on the road.