Car Insurance 101

Auto insurance is designed to protect you against substantial liability or financial loss should an auto accident occur. The insurance company provides you with an insurance rate, based on the risk involved with insuring you, and in turn will cover any financial loss you would have incurred as the result of an accident.

Auto insurance consists of 3 major types of coverage: property coverage, liability coverage, and medical coverage. Property coverage covers you in the event that your vehicle gets stolen or damaged. Liability coverage pays for any legal obligations you may be responsible for paying due to injuries or damage caused as the result of a car accident. Lastly, medical coverage pays for any injuries, medical expenses, money lost due to work missed, and in the worst case scenario, even funeral expenses.

Most insurance companies offer 6 different coverage types: Bodily injury, medical, property damage, collision, comprehensive and uninsured motorist coverage. Depending on the state, you may be required to purchase some, or even all of the policies offered by an insurance provider. It is important to speak with your insurance agent in order to determine what type of insurance policies are required or recommended pertaining to your particular situation.

Almost all auto insurance policies are offered in either 6 month or one year long terms. Your provider should send you a letter informing you when your policy is about to expire and when you are required to pay your insurance premium.