Important things to know about auto insurance
Automobile insurance is required to drive a car, even if you don’t own a car. Before buying a policy, it’s important to know what auto insurance is all about.
What is it?
Automobile insurance is a type of property/casualty insurance that provides liability coverage in case you damage property or injure someone as the result of a car accident in which you are default. Depending on the levels of coverage you have, such insurance might also pay for damage caused to your car.
Who is it for?
An auto policy is for anyone who drives a car, even occasionally. The policy goes with the driver, not the car. If you don’t own a car but sometimes drive a friend’s or relative’s car, you should carry insurance.
How does it work?
Auto insurance works like other types of property/casualty insurance in that you file a claim every time there is a covered event. If you hit another car, you need to immediately notify your insurance company and start a claim, and if you are found to be at fault, your insurance company will pay for the damage you caused. If another person is at fault, his or her insurance should pay for your damages, although you still should notify your insurer. If you have higher levels of coverage, your insurer may also pay for damage to your car even if you are at fault.
Different types of coverage
Liability insurance is the minimum level of auto coverage you need to have. This type of policy pays for damage and injuries you cause. Collision coverage pays for damage to your caused in an accident that isn’t covered by another person’s insurance. Comprehensive coverage pays for damage to your car caused by non-collisions, such as weather and fire damage, vandalism and theft.
The major benefit of having car insurance is that you have liability coverage in case you cause damage or injuries in an accident. An additional benefit is coverage for your car if you carry collision and comprehensive coverage, although you have to pay a deductible before those coverages kick in.