If you drive a car, whether you own your car or lease it, you need to have auto insurance. The main reason you need insurance is to protect you in the event of a crash or car damage. Auto insurance provides coverage for liability, property damage, and medical expenses, and it’s important to understand what type of coverage you have and how it works.
Liability coverage is the most common type of auto insurance coverage. Nearly every state requires drivers to carry a minimum amount of liability coverage. If you are in an accident that is decided to be your fault, your liability coverage will pay for damage you have caused to property, as well as medical expenses incurred by another driver or passengers.
Driving without liability coverage can have serious consequences. Eric Ramos explains, “If you’re hit by a negligent driver who is uninsured, it is unlikely that you can recover compensation from that person. You can still file a lawsuit, but the other driver probably doesn’t have the cash or assets to compensate you for any legal judgment you might obtain.” In short, driving without sufficient insurance comes with major financial and legal consequences. You could get a ticket or face a lawsuit if you cause an accident and don’t have coverage.
Property coverage from auto insurance comes in two main forms. Collision coverage covers damage done to your car from a crash that isn’t covered by someone else’s insurance. For example, if you cause an accident, your liability coverage would cover damage to the other car, while your collision coverage would cover damage to your car. This type of insurance will cover the costs of getting general mechanical repairs and well as replacement of certain features on your car. If you upgrade your car with a high-end grille and other mods, then you will likely need Custom Parts and Equipment coverage. Comprehensive coverage covers damage to your car that’s not caused by a crash. For example, if a tree falls on your car or if it catches on fire, your comprehensive coverage would pay for the damage.
There are various medical coverages that might be included with your auto insurance. As was previously mentioned, liability insurance provides medical coverage for people in another car that you might hit. You also can get insurance that specifically provides medical coverage for you and anyone else that might be in your car. Christensen Law explains that “Nearly everyone has experienced a fender bender or other minor traffic incident; motor vehicle crashes cause approximately 2 million injuries a year.”
Because car accident injuries are so common, some states require what’s called personal injury protection (PIP), which pays out for medical bills regardless of who is at fault in a crash. Because of that, it often is referred to as “no-fault” coverage. If there is no auto insurance to cover your injuries in a crash, then your health insurance typically will pick up the bills.
The Bottom Line
A car accident can cause serious damage—both to people and property. That’s why it’s important for you to have the proper levels of coverage before you get behind the wheel. Understanding the different types of coverage that insurance provides ensures that you’re covered in the case of a crash.
If you found this article helpful, don’t forget to check out the other car tips we have in our travel column! Whether you are preparing yourself for a trip or just making sure you are doing all you can to keep your family safe, we have the information you need.