Car insurance coverage Types, Liability and Physical Damage
Car Insurance definition in 1 minute
Automobile insurance is a way to protect yourself and your vehicle in case of an accident. An auto insurance policy is a contract between you and an insurance company. Therefore you agree to pay the cost of the insurance policy, called a premium. And to obey the insurance company’s stated rules. As a result, the insurance company agrees to pay for certain damages according to your car insurance coverage.. For instance damages associated with an accident or other covered losses.
Car insurance (also known as Auto insurance) is insurance for cars, trucks, motorcycles and other motor vehicles. The primary purpose of this insurance is to provide financial protection against physical or bodily damage resulting from traffic accidents. Also auto insurance types can provide protection against theft and damage to your vehicle in different disasters. The specific terms of car insurance vary according to the legal regulations in each region. For instance click to view Car Insurance Terms and Coverages in California.
In many countries, You must have car insurance Coverages to drive your vehicle on roads. Generally, Car insurance covers both the car and the driver, but the degree of each varies greatly. This means, if you have an accident causing damage or injury to any other person, vehicle, animal or property, your auto insurance covers you. It does not cover any other costs like repair to your own vehicle. in most countries the third party insurance has a legal minimum, named car insurance minimum coverage limits.
Car Insurance Coverage Types
Auto insurance divided into two basic coverages, liability and physical damage:
Auto liability insurance policies contain three major parts. Firstly liability insurance for bodily injury. Secondly liability insurance for property damage. Finally uninsured / underinsured motorists coverage.
- Bodily injury liability insurance: Bodily injury liability insurance protects you against the claims of other people injury. Peoples who injured during an accident for which you were at fault. Most states requires you to carry a minimum of $25,000 per person for bodily injury and $50,000 for all persons injured in one accident. Also claims for bodily injury may include medical expenses, lost wages, and pain and suffering.
- Property damage liability insurance: Property damage liability insurance pays for any damage you cause to the property of others. This not only includes damages to other vehicles but also other property, such as buildings, walls, fences, and equipment. The minimum limit in most states of USA is $25,000 for all property damage in one accident.
- Uninsured motorists coverage: Uninsured motorists coverage protects the policyholder directly. This coverage pays if you injured and/or your property damaged by a hit-and-run driver or an uninsured driver. Most states law requires you to carry uninsured motorists coverage equal to the minimum amounts of liability coverage. There is typically a $200 deductible.
- Underinsured motorists coverage: Underinsured motorists coverage is similar to uninsured motorist coverage. But pays for your injuries or property damage if the at-fault driver does not have enough insurance to cover your damages or medical bills. In most states, auto insurers are required to offer you underinsured motorists coverage, but you are not required to purchase it.
Physical Damage Coverages
Physical damage is auto insurance coverage that insures against damage to the insured’s own vehicle. The most common types are collision coverage and comprehensive coverage. These two coverages are optional to purchase.
- Collision coverage: Collision coverage pays for physical damage to your car as the result of your auto colliding with an object, such as a tree or another car. Sometimes the cost of repairing the car can quickly exceed a threshold of the car’s actual cash value. For example, an accident involving an older car or any vehicle sustaining extensive damage. In this case, insurers will “total” the car and pay you the actual cash value of the car, minus the deductible, rather than repairing it. As indicated by Motor Vehicles Law, this threshold is 75% of the vehicle’s actual cash value.
- Comprehensive coverage: Comprehensive coverage pays for damage to your auto from most other causes. Including fire, vandalism, flooding, theft, falling objects, and collision with animals. Comprehensive coverage will also cover broken glass, such as damage to a windshield.