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Auto Insurance 101

Updated: Feb 25, 2022




Auto insurance is a coverage for cars, trucks, motorcycles, and other road vehicles, which provides financial protection against property damage or bodily injury resulting from traffic collisions. Auto insurance also protects financial protection from property damage or bodily injury from any non-collision causes. Maintaining a car insurance is needed not only for financial protection but because it is required by law. When you get pulled over for a minor traffic violation, the officer would immediately ask for your driver’s license and insurance card. A simple ticket might turn into jail time if you can’t present a proof of auto insurance.


COVERAGES


Collision

A collision is any event in which two or more bodies exert forces on each other in a relatively short time. In auto insurance, it can be two cars colliding or one car colliding into a wall. Regardless of who’s at fault, collision can pay to repair or replaced a damaged or totaled vehicle if it hits another vehicle or object, another vehicle hits it, or the vehicle rolls over.


Comprehensive

It is also called other than collision coverage, which simply means coverage for damage to the vehicle caused by anything other than collision. The vehicle damage can be from a tree branch that fell on windshield, hail damage, damage to car caused by flooding, or broken glass from a riot. This coverage can help pay for damage to your vehicle from vandalism, theft, weather events and accidents involving animals.



Gap coverage

Gap insurance may help you cover the gap between what you owe on your car and your car’s actual cash value. If the car is totaled, the insurance company will pay for the depreciated value of the vehicle and not the original market value or the loan amount. The gap coverage will pay for the difference of the loan amount and the depreciated value of the car.


Uninsured motorist

An uninsured motorist is someone who doesn't carry auto insurance. So, if you collided with an uninsured driver who is at fault, the uninsured motorist coverage will help pay to repair your car and pay for your medical expenses. If an uninsured or underinsured driver causes an accident that results in property damage, bodily injury or both, uninsured motorist coverage may help pay for damage and medical costs for you and the passengers.



Underinsured motorist

Underinsured refers to various degrees of being insured. The driver maybe insured but his/her coverage may not be enough to cover the cost of property damage or bodily injury medical expenses if he/she is found at fault at an accident. Underinsured motorist coverage helps pay your expenses if you're hit by an underinsured driver. In some states, uninsured and underinsured motorist coverages are bundled together as a single coverage on the auto policy.



Bodily Injury Liability

Bodily injury protects you by paying for damages you may become legally liable for as a result of the accident you're found to be at fault of, including medical bills and loss of income for the injured party. In many states, the minimum coverage requirement is 25/50/25, meaning: $25,000 bodily injury liability limit per person. $50,000 bodily injury liability limit per accident. $25,000 property damage liability limit.


Roadside Assistance

Roadside assistance and breakdown coverage are services that assist motorists, whose vehicles have suffered a mechanical failure that leaves the operator stranded. Roadside Assistance coverage may even be available when you and your family household members are passengers in someone else's vehicle, or during a roadside emergency in which the vehicle is disabled. Roadside assistance includes towing, battery jump-start, flat tire replacement, locksmith when you get locked out of your car, emergency fuel service, and any mechanical repair.



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