If you own a car, you need automobile insurance. It is not only a good idea, but the law may require it of you. Insurance will protect you and your bank account in the event of an accident, as it can reimburse you for damage to your car, but more importantly, it can pay others to whom you become responsible in an accident that you may cause. To operate a vehicle without this type of protection is socially irresponsible as you may put others in financial peril.
Accordingly, many states have compulsory automobile insurance laws, requiring that drivers carry auto insurance and requiring that minimum liability limits be maintained.
The largest section of coverage under an auto policy covers bodily injury liability. This section is designed to pay others who you may injure if you cause an accident. It is important that you choose an amount of coverage that will protect all of your financial assets in the event of an at-fault accident.
Property damage liability coverage will pay others when you have damaged their property in an auto accident. This property can include other cars, landscaping, buildings or any other property that is damaged in an accident you cause.
Medical payments or Personal Injury Protection coverage is a section of the policy that provide protection to you and occupants of your vehicle. It pays directly for medical bills incurred in an accident, regardless of liability. In other words, you and your passengers will have your medical bills paid directly by your own policy whether the accident is your fault or someone else’s.
Collision and comprehensive coverage is also a section of the policy that will pay you directly. It pays for the repair or replacement of your vehicle in the event of a claim. Collision coverage pays when your car is damaged because of a collision with another vehicle or an object, and comprehensive coverage will pay to repair or replace your car if it is damaged by fire, hail, or some other peril.
Uninsured/Underinsured motorist’s coverage also provides a benefit to you in the event of an accident that is caused by someone that has little or no liability insurance coverage. This is a section of your own policy that pays you directly so it is important to evaluate your potential needs in the event of a disabling accident.
Understanding these sections of an auto insurance policy will help you understand how best to accommodate your needs, and how you are spending your premium dollars. Be sure to review these items with your own agent or broker when shopping for a new auto insurance policy.