Auto insurance

What is auto insurance?

Auto insurance protects you against financial loss if you have a car accident. It is a contract between you and the automobile insurance company. You agree to pay the premium and the auto insurance company agrees to pay your losses as defined in your policy.

Car insurance provides property, liability and medical coverage: An automobile insurance policy can be comprised of up to six different kinds of coverage. Most states require you to buy some, but not all, of these coverages. If you're financing a car, your lender may also have additional requirements.

Most auto policies are for six months to a year. Your insurance company should notify you by mail when it’s time to renew the policy and to pay your premium.

What is covered by your auto insurance policy?

Your auto policy covers six basic items.

1. Bodily Injury Liability
coverage applies to injuries that you, the designated driver or policyholder, cause to someone else. You and family members listed on the policy are also covered when driving someone else's car with their permission.

2. Medical Payments or Personal Injury Protection (PIP)
coverage pays for the treatment of injuries to the driver and passengers of the policyholder's car. At its broadest, PIP can cover medical payments, lost wages and the cost of replacing services normally performed by someone injured in an auto accident.

3. Property Damage Liability
coverage pays for damage you (or someone driving the car with your permission) may cause to someone else's property. Usually, this means damage to someone else's car, but it also includes damage to lamp posts, telephone poles, fences, buildings or other structures your car hits.

4. Collision
coverage pays for damage to your car resulting from a collision with another car, objects or as a result of flipping over. It also covers damage caused by potholes.

5. Comprehensive
coverage reimburses you for loss due to theft or damage caused by something other than a collision with another car or object, such as fire, earthquake, windstorm, hail, flood, vandalism, riot, or contact with animals such as birds or deer.

6. Uninsured and Underinsured Motorist Coverage
coverage will reimburse you, a member of your family, or a designated driver if one of you is hit by an uninsured or hit-and-run driver. This coverage will also protect you if you are hit as a pedestrian.