As the name suggests, auto insurance is a type of insurance providing coverage for cars, trucks and other types of motor vehicles. Automobile insurance provides coverage for both property damage and personal injuries that arise as the result of a motor vehicle accident.
Who Needs Auto Insurance?
The laws in all 50 states require the owner of a car to obtain a minimum amount of automobile insurance. This includes coverage to compensate the driver and passengers who end up involved in a car accident caused by that car owner. A motorist is able to obtain insurance coverage above and beyond the minimum requirements set forth by a particular state’s laws.
How Auto Insurance Works
Car insurance works like most other types of insurance. When an accident occurs, a driver files a claim for compensation to a car insurance company. If a person is deemed to have been primarily responsible for an accident, or if the other driver lacks insurance, the claim is processed by the car owner’s own insurance company. If the collision is deemed to be the fault of the other driver, who is insured, that individual’s insurance carrier is responsible for paying the claim.
Different Types of Car Insurance Coverage
All car insurance policies are designed to provide a designated level of coverage for personal injuries sustained by people in a driver’s car as well as passengers in another vehicle should the driver be held responsible for a collision. All such policies also include coverage for property damage sustained to another person’s vehicle if a car owner caused the accident.
A car owner has the option of obtaining or declining coverage for damage to his or her own car in the event that individual causes an accident. Some people elect to forgo that coverage if the value of their automobile has dropped below a certain level. Car insurance coverage also includes coverage if the driver of another vehicle who actually was responsible for an accident ends up being an uninsured motorist.
Major Benefits of Automobile Insurance
Automobile accidents can result in very costly catastrophic losses. The primary benefit associated with this type of coverage is the protection of a car owner’s assets (his or her home, for example) from being taken to pay for the losses associated with an accident.