Why You Need Auto Insurance
When you drive an automobile that has the potential to cause damage to other cars, people and property, carrying insurance coverage prevents overwhelming expenses connected to the damage and legal expenses. Most states require a minimum of liability insurance coverage, which will pay for the property damage or personal injury of others that you may cause, but there are options to add to that basic coverage.
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Basic liability coverage
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Each state requires that drivers carry the financial responsibility for any damage they may cause other drivers. The best way to demonstrate basic financial responsibility is to carry the minimum legal requirement called basic liability insurance, which provides coverage for any property damage, bodily injury or death a driver may cause. Basic liability does not cover damage to the driver's vehicle.
Full coverage
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While the law may only require you to carry basic liability, auto loan companies and lease companies may require you to carry full coverage to protect their investment, which is the vehicle you are buying or leasing. Full coverage includes basic liability insurance, but it also adds a comprehensive policy as well as collision coverage.
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Comprehensive Insurance
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Comprehensive insurance is additional coverage for damage caused to the vehicle you are driving, even if it is not your own vehicle. It also covers theft of the vehicle and damage from disasters such as floods and fires. The actual name of the policy referred to as comprehensive is comprehensive physical damage coverage.
Collision Insurance
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This protection is necessary if you are hit by another vehicle or an object that causes damage to your vehicle. This is necessary coverage in a collision with a vehicle in which the driver does not have any insurance at all.
Uninsured motorists
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For additional protection, collision insurance may be enhanced by uninsured motorist protection, which covers your vehicle if the other driver does not have insurance. Uninsured motorists insurance covers you in the event you or your vehicle is damaged by a driver who does not have insurance or if you are in a hit-and-run collision. Depending on the coverage, your insurance will cover the costs even if you never get any information from the other driver.
Deductibles
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For all of the policies listed above, a deductible is the amount you pay before the insurance kicks in. For example, if your deductible is $500 and your damages are $2,000, you will have to pay the deductible before the insurance pays $1,500. Deductibles can generally range from $50 to $1,000.
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References
- Photo Credit Crash on the street. German auto model 2007. image by Dariusz Kopestynski from Fotolia.com
