Auto insurance is generally misunderstood by most people but it is simple if one understands the basics of auto insurance. The basic coverage means the type of coverage that is required in order to drive legally. Comprehensive cover means coverage for the vehicle as well as the passengers in the vehicle. There are different types of auto insurance coverage, but we will discuss a few in detail.
Liability coverage
If you have to drive legally in the US you will need liability coverage. This is especially an important coverage if you wish to protect your assets and your home. In case you are found to be at fault in an accident then charges will be pressed against you and you might end up shelling out large sums of money. If you are the faulty driver and don’t have enough liability cover then you will end up paying every dollar (over your coverage limit) out of your pocket. Hence it makes sense to have adequate liability cover.
Liability coverage is further divided into three parts – property damage, bodily injury, and uninsured motorist coverage. The bodily injuries you cause to the other in the event of an accident will be covered by the bodily injury liability coverage. Here the damages for your car and injuries in your car will not be covered. Property damage liability coverage will cover all damage to others property – it could include buildings, vehicles, fences, trees etc. Uninsured motorist coverage offers protection to the passengers in the car in case the faulty driver is uninsured or in case of hit-and-run cases. There are no-fault laws in some states where you will be covered by insurance irrespective of who is at fault.
Collision coverage
In case your car is damaged in a collision then the insurance cover will pay for the damages to your vehicle. This is a costly coverage and if you have an old vehicle or if the vehicle is not worth the coverage then skip this coverage. However, if you have taken a loan on your vehicle or if it is purchased through finance then this coverage is mandatory. The important feature is that this coverage offers protection to your vehicle irrespective of who is at fault.
If the opposite driver has caused any damage to your vehicle then his liability cover will take care of the damages to your vehicle. If you have purchased collision coverage the case will be handled by your insurer and they will deal with the other driver’s insurance company.
