Things to know about auto insurance
If you drive a car, you need auto insurance, even if you don’t own a car. There are several important things you need to know about car insurance policies.
What is it?
Automobile insurance, depending on the level of coverage you have, can be both casualty insurance and property insurance. At its most basic level, car insurance covers you for liability you incur in an accident that’s your fault. Higher levels of insurance provide coverage for vehicles you own.
Who is it for?
Automobile insurance is for anyone who drives a car. Even if you don’t own a car, you need liability coverage if you ever drive, whether it’s your parents’ car, a friend’s car or a rental car.
How does it work?
Automobile insurance works like most other types of property and casualty insurance. If you are involved in an accident, you must contact your insurance company to institute a claim. Car insurance differs in one major way, however. With homeowners insurance and other types of property and casualty insurance, your insurer generally is paying for your damages; with car insurance, your insurer often pays for damage you do to others.
Different types of coverage
Liability is the most basic type of car insurance, and it is required for most drivers in almost every state. Liability pays for damages you cause in an accident that’s your fault. Many people also carry collision and comprehensive coverage. Collision covers damages to your car caused by a collision with another car, whether you are at fault or not. Comprehensive coverage pays for damages to your car caused by something other than a collision, such as hail, wind and fire damage, vandalism and theft.
The major benefit of having auto insurance is that you are covered in the event that you cause an accident. If you have collision and/or comprehensive coverage, you also are covered for damage that may occur to your vehicle.