For anyone that owns a motor vehicle, you have probably had to take out insurance on the vehicle especially if you had a car financed. But what exactly is auto insurance? As expected, it is a policy that protects you from any liability you may encounter as part of the damage to your car or your car doing damage to someone else or other property. 

 

In most cases, an auto insurance policy can be modified based on what types of incidents you want to be covered and for how much. But remember that the more coverage you get, the more of a premium you must pay to own the policy. So here are some key parts of what comes with owning auto insurance.

 

Bodily Injury Liability

 

For those who are least inclined to have auto insurance, this is the most important part of an insurance policy. Although statistically, it is least likely, there may be an encounter where you are at fault in an accident that does serious injury to the individuals you were involved with. When this is the case, whether they have insurance or not, these victims are entitled to file a claim against your policy for any medical bills they may accumulate in their recovery process. It is critical that you have this policy and have a good level of coverage, or you could face a hefty lawsuit.

 

Property Damage Liability

 

This is among the more common coverage people own on a car insurance policy if you are at fault in an accident and cause property damage. When it has been deemed that you are at fault for an accident, the person whose car you hit is again entitled to file a claim against you to have your insurance pay for any damages. While this coverage generally will only cover up to the fair market value of the car itself, It is still much better than having to pay for another car’s damages out of pocket.

 

Personal Injury Protection

 

Personal injury protection is generally a hit or miss type of coverage but is particularly important if you or passengers in your vehicle have poor or no health insurance. It is important that if you are in an accident and there is bodily harm inside your vehicle, your auto insurance policy may cover medical expenses that may not be adequately covered under you or your passenger’s health insurance. This coverage is especially important when you are carrying people in your car who are not part of your household and are hurt in an injury where you are the driver.

 

Uninsured/Underinsured Motorist

 

This coverage tends to not be as popular but it is important in the rare occasion that you are in an accident where you are not at fault and the person who causes it does not have adequate insurance to cover your damages. In these cases, your options would be file to the lawsuit through the court system to cover for minor damages or have coverage under your policy that will allow your insurance company to cover the damages from such an accident. 

 

While a lawsuit may seem easier to pursue, the legal fees may not justify the process if you are going after a small claim that is only for property damage. A lawsuit might be the better option if there are major medical costs incurred due to the injury. 

 

Comprehensive

 

Comprehensive coverage is a policy that will pay for any damage your car might encounter when it is not being used, say in a driveway or a parking lot and something happens to it. It is more likely people might forego this policy if they tend to leave their car in a garage at home or have a garage they park in at work. 

 

But some people might feel the need to take on this policy if they feel their car might be at risk with something like getting hit by a tree or hail damage. This coverage may also be worth having for incidents like dents and scratches from other cars and vandalism. 

 

Collision

 

Collision is more like an umbrella policy, that basically will cover the cost of any damages in an incident regardless of who is at fault. This is important to have because when you are at fault and your car takes on damage, this is the only policy that will cover any damages you take on. Some people may choose not to take on this policy if they feel their car has little to no value, and are willing to take the loss as opposed to paying a premium that would likely declare a car totaled if it gets significant damage. 

 

Lenders who finance new cars usually require owners to own this coverage as a protection against financial interest.

 

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