How Auto Insurance Works
Auto insurance can cover damages done to you, your car, other people, and others' property as a result of owning or operating a vehicle. The amount of insurance you need is dependent on the other insurance coverage you have, the value of your car, the amount of other assets you need to protect, and the rules in your state.
Basic Auto Insurance Coverage
Auto liability coverage. This type of coverage is absolutely essential. If you cause an accident with your car and injure someone or damage their property, auto liability insurance will the pay the injured person's medical and repair expenses up to the limits of coverage you purchase.
Most states require some level of auto liability coverage. If there is an accident and you are responsible for damages, you want to make sure your assets are protected. If you have other assets, such as a home or investments, you want to make sure you do not lose them in a lawsuit over an auto accident. The more assets you have, the greater the coverage you need. Discuss the coverage and costs with your Risk Advisor.
Collision coverage. This portion of your policy covers repairs to your car after an accident, no matter who caused it. Both collision and comprehensive insurance are generally written to cover the car's fair market value.
Comprehensive coverage. This portion of your insurance covers damage to your car as a result of random acts like fire, theft, floods, hail damage, vandalism, and even damages caused by flying objects.
Auto Insurance Action Steps:
- Review deductibles on your collision and comprehensive coverage to find possible savings.
- Review liability limits.
- Review uninsured/underinsured motorist liability limits.