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Insurance Basics

Auto insurance is a package of protection that includes several different areas of coverage. Depending on where you live and the laws in your home state, some of these parts of a policy will be mandatory, while others will be optional. The best auto insurance plan is the one that provides the most far reaching coverage for a price you can afford. Learn more about auto insurance basics and determine which areas of coverage are most important to you as a driver.

Auto Liability

Liability auto insurance is the basic building block of protection for all drivers. No matter if you live in a tort or no fault state, you'll need liability coverage. Different states have their own requirements for liability. Some of them use a single limit system where all expenses can be drawn from one source; while others prefer a split limit system dividing bodily injury and property damage. Liability insurance pays out for the cost to the other driver in accidents you are liable for. It does not include any coverage protecting you against injury or your vehicle against harm.

Collision and Comprehensive

Collision and comprehensive insurance protect the covered vehicle against property loss in a wide range of cases. Many different loss types are included, and this list can vary, so it is important to consult your policy for a full listing. Theft, vandalism, storm damage, and many other threats are handled by comprehensive insurance; while collision coverage focuses in on property losses stemming from auto accidents. Collision and comprehensive are generally not required at the state level, but lenders typically require drivers leasing or financing their cars to carry these coverage elements until their obligations are paid. "Full coverage" policies include liability, collision, and comprehensive along with any additional no fault coverage a state may require.

Uninsured/Underinsured Motorist

Uninsured and underinsured coverage provide the protection that takes the place of the other driver's liability policy when no such policy is in place or when that policy is insufficient to cover all expenses. Uninsured handles accidents where the at fault driver had no insurance, and underinsured takes care of claims where the negligent driver's coverage was maxed out. These policies are required by some states but are optional in others.

Medical Payments

Medical payments coverage is another area of auto insurance protection that is sometimes required, depending on where you live. It provides supplemental medical expense coverage for covered drivers and passengers to attend to necessary treatment, recover lost wages, meet funeral expenses, and handle other associated costs that could follow a car accident. Medical payments coverage is not to be confused with PIP or no fault insurance.

Personal Injury Protection (PIP)

Personal injury protection (PIP) is the part of an auto insurance policy in no fault states that make no fault what it is. This policy guarantees that the individuals involved in a car accident who receive injuries in the collision get the medical treatment they need regardless of fault in the accident. This is not to suggest that in no fault states, there is no need to determine blame in car accidents as some people mistakenly think. What it means is that while insurance adjusters or law enforcement officials are surveying the scene and determining who was to blame, those who were injured should not have to wait to determine which liability policy the cost of treatment comes out of.

There are other available endorsements such as towing and roadside assistance. Get to know the basics of auto insurance and put together a policy you can afford by using our free quote form.