Auto Insurance 101

Car Insurance - What is it?

Consider car insurance the protection you need for your vehicle in the case of an accident. A vehicle is one of your most precious assets so be smart and protect yourself in order to enjoy and maximize the use of your car or truck. Not only is your vehicle protected, but maintaining adequate car insurance is a means of protecting your income and savings as well. Without car insurance, you would have to pay out of pocket cash to fix your car or another car involved in your accident. Instead, car insurance will pay to fix the damages to your car in any accident you may cause.

Is auto insurance really necessary? Do I have to have it?

Yes, auto insurance is necessary to maintain the value of your automobile. You are putting your personal assets at risk if you drive without auto insurance. Auto insurance is compulsory in most states. In order to purchase a vehicle or get a driver’s license, showing proof of insurance is often required.

What happens if I drive with no auto insurance?

Drivers who drive without auto insurance put themselves at major financial and legal risk. If you cause an accident and are not protected with auto insurance, you may have to pay tens of thousands of dollars to repair the vehicles associated with the accident. You may also be required to pay the medical bills of anyone hurt in the accident. Driving without auto insurance may also be illegal in your state. You could be arrested for driving without auto insurance.

Can anyone get car insurance?

Yes, generally anyone can get auto insurance, but the insurance company may ask for proof of employment or residency to establish your ability to pay for insurance premiums. You will also need to have a valid driver’s license. Be sure to disclose any special needs you have so the insurance company can try to accommodate your unique situation.

What's a car insurance deductible?

A car insurance deductible is the amount you would have to pay in the case of an accident. Generally your portion is a fixed amount such as $500 or $1000. When you establish your insurance policy you can determine how much the deductible will pay, coordinating it with the amount of coverage and the cost of your monthly or annual premium.

What types of auto insurance are available?

There are different types of auto insurance available depending on the type of vehicle you own. A luxury car will require a top notch policy while a truck, mobile home, or motorcycle will result in special policies or unique riders based on your type of vehicle.

In general your insurance policy will contain basic liability insurance that safeguards the cost of repairs in the case of an accident. Liability coverage is the compulsory aspect of auto insurance, meaning that it is the most basic level of coverage that you need to sustain. You can also purchase comprehensive indemnity that covers any other types of damage done to your automobile while it is parked such as dents, scratches, or damages associated with theft.

Uninsured motorist protection is additional coverage that will protect you in the event that you are involved in an accident caused by a driver who does not have his or her own insurance. It usually does not cost that much extra but it may pay off if you have the unfortunate situation of meeting an uninsured or underinsured driver.

Another key component to your insurance coverage is medical liability, sometimes called PIP or personal injury protection. Medical bills resulting from injuries occurring in accidents can be much more expensive than the cost of car repairs. Making sure that your health and the health of your passengers can be restored is a vital component to your auto insurance policy. Various coverage limits exist so be sure to determine what the appropriate coverage is for you. Cars can be fixed but physical and emotional injuries may affect the injured person for years.

Does auto insurance keep me from getting sued?

Carrying auto insurance is no guarantee that you won’t be sued, but maintaining adequate insurance protection may be a deterrent to a lawsuit. Attorneys will go after your insurance company before coming after you. Effective auto insurance is indispensable.