Car Insurance is the Insurance purchased against cars to protect them against losses occurred due to traffic accidents. It is an agreement between a person and insurance provider. Person agrees to pay the premium and the insurance company agrees to pay your losses as defined in the policy.
The Insurance Premium can be either mandated by the government or determined by the insurance company in according to the rules set by government. The Premium can be varied depending on many factors like characteristics of car, profile of the driver and usage of the car.
Auto Insurance is a package of different coverages. Depending on the package opted, Auto Insurance covers insured party, insured vehicle and third parties or all. Some of the coverages includes Liability Insurance, Collision and Comprehensive Coverages,
medical payments, PIP, and no fault coverages and uninsured/under insured motorists coverages.
Liability Coverage:
Liability Coverage is the basis of any Auto Insurance policy. This policy will pay for your bodily injury and property damage expenses caused to others in accident.
Property-Damage Coverage pays for the repair and replacement of things that you damaged in an accident, other than your own vehicles.
Collision & Comprehensive coverage :
Collision Coverage will pay to repair your vehicle, if you cause an accident. Collision coverage is normally the most expensive component of Auto Insurance. Comprehensive Coverage will pay for the damages caused to your vehicle other than Auto accident, like damages from theft, fire, natural disaster.
Medical payments, PIP, and no fault coverages:
Medical payment coverage will pay the medical expenses after an accident for you and your passengers. This coverage will pay regardless of who is fault, that is, this policy pays the expenses that arise from accidents while you are driving your car, someone's car or injuries caused to you or your family while you are pedestrian.
PIP, personal injury protection and no-fault coverages are expanded forms of medical payments that include payments for lost wages and child care.
Uninsured/Under insured motorists coverages:
Uninsured motorists coverage pays for your injuries, if you are struck by hit-and-run driver or someone who doesn't have Auto Insurance. Underinsurance motorists coverage will pay out, if the driver who hits you causes more damage than his own liability coverage.
Other than these main coverages there are some other supplemental policies like Rental reimbursement, towing and labour and Gap coverage to cover vehicle rentals required when your car is damaged or stolen, charges in case of road break down. Gap coverage for your new car will pay the difference between the actual cash value you receive for the car and the the amount left on your car loan.
If you are interested in protecting yourself against from hefty repair bills, and lawsuit , it makes sense to buy more than what is required, however if your car worth lessthan what you are paying for the coverage then, better not to have it.
