Auto Insurance

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Auto Insurance

In the event of an accident, having at least the most fundamental level of personal auto insurance is required by the majority of states and offers you some financial protection. But is it even sufficient? What are the different possibilities? Find out how auto insurance policies are structured and available coverage options.

What is Auto Insurance?

Auto insurance is an agreement you enter into with the insurance provider that secures you from financial loss in the case of an accident or theft and is designed to cover the costs associated with those losses. In return for you providing a premium, the insurance provider commits to pay for any losses you incur, provided the policy covers such losses.

Coverage under an auto insurance policy includes the following:

  • Property- things like your car being broken into or stolen.
  • Liability- your legal obligation to other people if they sustain physical harm or property damage.
  • Medical- the expense of medical care and rehabilitation, as well as, in rare cases, compensation for lost wages and burial costs.

Most states in the United States require individuals to have minimum liability coverage for their vehicles; however, the specifics of this need vary from state to state. Because auto insurance coverages are priced separately, you can tailor the coverage amounts to meet your requirements while staying within your financial means.

Policies are often provided for six months or one year and can be renewed after expiration. When it is time to renew the policy and pay the payment, the insurance provider will send you a reminder in the form of a letter.

Who Does Auto Insurance Cover?

Your vehicle insurance coverage will cover you and any other family members included in the policy, regardless of whether you are driving your car or another person’s car (with their permission). Your policy will also protect you if a person who is not listed on it drives your vehicle with your permission and they are in an accident.

You are solely covered for personal driving under your auto policy, regardless of whether you are driving to and from work, running errands, or going on vacation. You will not be covered under this policy if you use your vehicle for business reasons, such as delivering food.

If you use your car to give rides to other people through a ride-sharing service like Uber or Lyft, your auto insurance policy will not protect you in this situation either. However, there are now extra insurance packages offered (at an additional fee) by several auto insurers. These products expand coverage for vehicle owners who participate in ride-sharing programs.

What Are the Types of Auto Insurance?

State regulations for automobile insurance differ. If you’re financing a vehicle, your lender may impose additional conditions. Almost every state mandates automobile owners to carry the following:

Bodily injury liability

This covers the costs of injuries or deaths caused by you or another motorist while operating your vehicle.

Property damage liability

This pays out to other parties for harming you or another driver driving your automobile causes to another vehicle or piece of property, like a building, fence, or utility pole.

Personal injury protection

Medical payments repay you or your passengers for medical expenditures incurred due to injuries. In addition, it will reimburse lost wages and other expenses.


Comprehensive insurance protects against theft and damage caused by events other than a collision, such as fire, vandalism, flood, hail, trees, or falling rocks.

Frequently Asked Questions