Facts about Auto Insurance in the United States
Auto insurance in the United States comes in different types that are available for commercial and personal vehicles. Auto insurance is designed to pay for damages that occur as the result of an accident while driving a vehicle. A policy consists of three types of coverages that are standard no matter what company sells the auto insurance policy. One of the unique features in the United States is that in every state it is illegal to drive a vehicle that does not have an insurance policy in force.
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Collision Coverage
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All auto insurance policies in the United States provide coverage for collision. This is a type of coverage that pays for damages that were the result of an accident with another vehicle or an object. An accident can include a major collision or a fender bender that causes minimum damage to a vehicle. When a collision accident occurs, the person at fault will typically receive a ticket for a traffic violation that can result in higher insurance rates.
Comprehensive Coverage
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This type of coverage is also a feature on all auto insurance policies sold in the United States. This coverage pays for any type of damage that does not involve a collision with another vehicle. Damage can include fire, theft or if a driver hits a deer on the road. The same type of coverage limits as collision coverage apply, as well as a deductible.
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Liability Coverage
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Another feature on all auto insurance policies that are sold in the United States is a coverage for liability. This is also known as bodily injury and property damage coverage. Liability coverage will cover medical expenses for passengers in another vehicle as well as the passengers in an individual's own vehicle when there is an accident. This coverage will also pay for legal expenses in the event that a driver is sued.
Mandatory Coverage
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Every state has a law that mandates a minimum amount of liability insurance be carried on each auto insurance policy. Each state has its own minimum amount of liability coverage that is required for every auto insurance policy that is sold. This can range from $20,000 to $40,000 to $50,000, depending on a state's minimum coverage amount.
Deductible
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All insurance policies in the United States come with a deductible that needs to be paid before a policy will cover any damages. The deductible can range from $250 up to $1,000 or more depending on what an insured is willing to pay. Individuals who choose to have a higher deductible will see a decrease in the cost of their insurance policy. This is because a higher deductible means that an insurance company has less to pay out when a claim is filed.
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