Auto insurance is insurance specifically for automobiles, motorcycles, trucks, and any other road-going vehicles. Its primary function is to offer financial coverage against physical damage or personal injury resulting from accidents in a vehicle and against liability which can also arise out of criminal acts in a car. It is therefore important to understand the main functions of auto insurance and how auto insurance can help you. This article briefly discusses the major functions of auto insurance.

auto insurance

When you purchase auto insurance you may want to consider the coverage level which is typically set by the company you purchase it through. Auto insurance companies usually have standardized levels of coverage which are referred to as auto liability coverage limits. These may include bodily injury coverage, property damage coverage, medical payments coverage, collision coverage, and uninsured/underinsured motorists coverage.

Bodily injury liability is perhaps the most common reason people purchase auto insurance. This provides them with protection in case someone is injured while driving the vehicle they own. Property damage coverage is useful if the vehicle is damaged during an accident. Medical payments coverage helps to pay medical expenses and the cost of treating injuries sustained. Collision coverage provides funds to pay for the repairs to the automobile involved in the accident provided the driver has sufficient coverage.

It should be noted that states do vary in their required minimum auto insurance coverage limits. Some states require more than others. For instance, in Washington State a motorist must have at least bodily injury liability coverage. In other states a motorist must have at least liability coverage.

Another function of auto insurance coverage is to protect a borrower in the event that they are a victim of theft. PIP coverage pays for medical and repair costs incurred by the victim resulting from being stolen. If the uninsured motorist coverage is purchased by the insured then this will eliminate the need for the uninsured motorist coverage. However, PIP plans can be purchased separately should the need arise.

Collision policies will pay for repairs to the vehicle involved in an accident up to the difference between the vehicle’s current market value and the amount paid for repairs by the driver or owner. In Washington State the hit-and-run provision of uninsured motorist coverage reimburses the driver who was not covered by the at-fault policy for the repair costs. The only drawback to this type of collision policy is that it does not cover the driver involved in a car crash if they were the cause of the accident.

A comprehensive policy will provide coverage for both bodily injury liability and property damage liability. Bodily injury liability covers the costs associated with treating injuries sustained by people. Property damage liability provides coverage for damage to or caused by the insured’s vehicles and other property. This form of auto insurance differs from the other forms in the way it is structured. The first aspect of this type of insurance is that bodily injury liability and property damage liability are included in the coverage per person per accident; therefore, the victim’s family is charged for the cost of their loved one’s medical care or funeral expenses.

As you can see, adding more coverage is not always the best solution when purchasing auto insurance. Therefore, before purchasing insurance make sure that the vehicle being insured is worth the purchase price. This way you can rest assured that your financial obligations will be covered no matter what happens in the event of an accident.

The minimum amount of bodily injury liability that every state requires car owners to purchase insurance is set forth in the laws of each state. Some states require car owners to purchase uninsured motorist coverage as well. These policies pay the costs associated with damages or injuries to another driver if the insured is at fault for the accident. The uninsured motorist policy provides insurance coverage but no medical costs or any out-of-pocket costs.

With no-fault coverage a driver who is injured in a traffic accident will not have to pay medical expenses, repair costs or any out-of-pocket expenses. If the injured person has no means of paying these expenses he or she will be provided the monetary support through income replacement programs. The no-fault states also provide coverage for pain and suffering as well as loss of income. However, in order to qualify for this policy a motor vehicle must have been damaged or be disassembled for repairs to occur.

In order to decide if a person needs no-fault insurance or not you should consider the following scenarios. First, if you are found to be at fault for an accident where another motor vehicle is damaged then you may be held liable for all medical and repair expenses that are needed to repair the vehicle. You may also be responsible for the cost of lost earnings if your disabled vehicle does not earn any wages. No-fault insurance can help cover these expenses and others that may be faced because of no-fault accidents. So, if you want to ensure you remain protected then take a look at your current insurance policy and determine if you are currently carrying enough insurance to protect your finances.