What is auto insurance?
Auto insurance is a contract between a vehicle owner and an insurance company that addresses the financial concerns of scenarios involving accidents or theft; auto insurance can also pertain to trucks, motorcycles, and other road vehicles. Insurance companies provide policies that address property concerns (such as with any damage to your vehicle or a situation of theft), liability concerns (when another party suffers bodily harm or property damage on account of your vehicle), and medical costs associated with the treatment of injuries, rehabilitation services, lost wages, and potentially funeral expenses. Auto insurance is a coverage that is mandated by almost all 50 states, but policies and pricing are customized to the individual on a six-month or yearly basis.
Synonyms for Auto Insurance
Car Insurance: This is another term for auto insurance. The two may be used interchangeably.
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When do I need to be aware of auto insurance?
Anyone who is going to be registering a vehicle, purchasing a vehicle with the help of a lender, or driving a vehicle will need to carry an auto insurance policy. Many policies are underwritten to extend coverage to family members who will also be driving a vehicle, as well as proving coverage when you are driving someone else’s car. There are separate policies needed to distinguish between commercial or personal use vehicles.
What is important to know about auto insurance?
Every state except New Hampshire and Virginia require car insurance. Some states have specific coverage requirements, though most require drivers to carry property damage liability and bodily injury liability at certain thresholds. Additional coverage may be required to address uninsured motorists and personal injury protection. There are some other important items you should know about auto insurance:
- Coverage requirements typically address the other party’s vehicle or medical needs, but collision insurance addresses your personal vehicle’s damage.
- Comprehensive coverage works in situations of theft or damage to the vehicle from fire, hail, flood, vandalism, falling objects, or other hazards.
- Gap insurance is an additional purchase that can cover the costs of depreciation if your vehicle is still or totaled by an accident.
Gap insurance is an additional purchase that can cover the costs of depreciation if your vehicle is still or totaled by an accident.