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If you drive, you are mandated by law to have some level of auto insurance coverage. Below is an overview of car insurance, how it works and the different kinds of coverage available.

What Is It?

Auto insurance is coverage that provides financial protection for the driver from the consequences of accidents. Should a driver or passenger be hurt and/or there is property damage, this type of policy will compensate for the costs, up to the limits of policy. There are occasions in which the accidents are handled as no-fault and in these cases each covered individual pays for his or her own costs resulting from an accident.

Different Types of Coverage

For basic damage and injuries as a consequence of a car crash, general liability insurance is what covers the individual. The coverage that compensates for repair or replacement of your own car is called “collision.” Comprehensive coverage pays out for any damages resulting from any other perils. Some level of liability and bodily injury protection is required in most states. Often underinsured/uninsured motorist coverage is also made available to protect you from the ramifications of being hit by a driver with little or no coverage.

Benefits of Good Car Insurance

There is of course the legal mandate for coverage, which is an obvious benefit. A policy will often pay out amounts up to $100,000 (depending on your coverage choice) per person in damages should you be at fault for an accident. Having no coverage means you are vulnerable to losing your home and other assets in order to pay for damages.

Car insurance has many pluses, even if you are fortunate enough to never be in an accident. There is great peace of mind in knowing that you are financially protected should you have an accident, regardless of who is at fault. There is also the relief in having your financial health assured.



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