What Is Car Insurance?

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Auto insurance comes in my different forms based on the type of coverage you want. The most common types of coverage found include:

• Liability- Liability insurance covers you if you cause an accident. It also covers anyone you may injure or any property you may damage resulting from your accident. It can also cover court costs if someone where to take you to court over your accident. You are required by law in 45 states to have liability insurance.
• Collision- Collision coverage pays for the damage done to your car. If you get into an accident and total the front of your car you will receive a check that should cover the cost to fix your car.
• Medical- Medical insurance covers any medical expenses you may incur in an accident regardless of who is at fault. If you are not at fault then the insurance company of the driver at fault will most likely pay for your medical bills, or at least reimburse your insurance company. You can also get Personal Injury Protection, which will cover you if you lose wages at work due to a medical injury.
• Uninsured/Underinsured- Uninsured coverage will cover you if you get into an accident with someone who is uninsured. This will also cover you in a hit and run accident or if you get hit while walking. Underinsured coverage covers any extra costs that still exist once the driver who is at fault’s insurance runs out.

When you get auto insurance you must decide what to make your deductible and premium. Your premium is the monthly payment you pay on your policy and the deductible is the amount of money you are liable for when an expense happens to your car. For example, if your deductible was $500 and you got into an accident and your car needed $3,000 worth of work you would pay $500 and the insurance company would pay the other $2,500. If the damage was less then $500 you would pay it all. The higher your deductible the lower your monthly payment, so in a way choosing your deductible is a gamble.