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Learn About Auto Insurance

Auto Insurance has multiple facets of coverage. Below, we explain to you each coverage for auto insurance, so you can make the most informed decision in the type of auto insurance you need. Classic Insurance can help you pick the best insurance coverage for you.

Auto insurance protects you against financial loss if you have an accident. It is a contract between you and the insurance company. You agree to pay the premium and the insurance company agrees to pay your losses as defined in your policy. Auto insurance provides property, liability and medical coverage:

  • Property coverage pays for damage to or theft of your car.
  • Liability coverage pays for your legal responsibility to others for bodily injury or property damage.
  • Medical coverage pays for the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses.

An auto insurance policy is comprised of six different kinds of coverage. Most states require you to buy some, but not all, of these coverages. If you're financing a car, your lender may also have requirements. Most auto policies are for six months to a year. Your insurance company should notify you by mail when it’s time to renew the policy and to pay your premium.

Auto insurance is protection. When you enter into a contract with an insurance company, they agree to protect you from financial losses resulting from an accident, in exchange for your payment of a premium.

Your policy will define what losses are covered, and the coverage limits. Auto insurance provides coverage for property, medical expenses, and liability.

Property coverage pays if your vehicle is damaged or stolen. Medical coverage pays for treatment of and rehabilitation for injuries. It may also cover lost wages and funeral expenses. Liability coverage pays if you are at fault in an accident that results in property damage or personal injury.

What are the 6 types of auto insurance coverage?
Auto insurance policies contain six types of coverage. States have different requirements for coverage, and a few don’t require it at all. When you finance a vehicle, the lender may also levy certain requirements for coverage. Most auto policies are purchased for periods of six months to one year. You will be notified by your auto insurance company when it’s time to renew your policy, in addition to being billed for the premium.

There are six types of auto insurance coverage. The most basic type is liability coverage. It protects you if you are at fault in an accident. Normally, you are only able to opt for liability only coverage when you own your vehicle outright. If the vehicle is financed, the lender, and the insurance company, will most likely require you to have full coverage. A full coverage policy may include six types of coverage, or some combination thereof.

What is Property Damage Liability?
This pays for damage to someone else’s property caused by your vehicle, whether you are driving it, or someone else is driving it with your permission. In vehicle accidents, this usually means someone else’s car is damaged. But this coverage also includes damage to other types of property, both private and public, like fences, guardrails, telephone poles, homes or other buildings, or any other structures your car may have hit.

What is Bodily Injury Liability?
This covers injuries caused to someone else either by the policyholder, or any other family member included on the policy. It applies whether the injury is caused when you are driving your own vehicle, or you’re driving someone else’s vehicle with their permission.

It’s an important of coverage to include in an auto policy because, in the event of a serious accident, the other party may sue you for damages. Many states have minimum requirement laws for this coverage, but you may want to consider increasing the amount of coverage in your policy to protect your assets in case of litigation.

What is Comprehensive?
With this coverage, you will be reimbursed if your car is stolen, or if it’s damaged by something other than an accident with another vehicle. Natural disasters like tornadoes or earthquakes, hail, falling objects, vandalism, fire, or colliding with animals such as deer or birds can cause damage ranging from a few dings to total loss.

In addition, if your windshield cracks or shatters, comprehensive insurance will cover it. Glass coverage may be provided with or without a deductible, depending on the company. Comprehensive coverage usually carries a deductible of $100 to $300, but it is possible to select a higher deductible, thereby lowering your premium.

What is Collision?
As the name states, this coverage pays if your vehicle is damaged as a result of colliding with another car or object, or if your car flips over. It also pays for damage caused by potholes. If you are at fault in an accident, collision coverage will pay for the cost of repairing your vehicle, minus the deductible. Collision insurance usually carries a deductible of $250 to $1,000, and as with other auto insurance coverages, the higher the deductible, the lower your premium.

If you are not at fault, your collision coverage will still pay to have your car repaired, but you still have to pay the deductible. Your insurance company may try to recoup the cost of repairs from the at-fault driver’s insurance company. If they are able to do so, you will be reimbursed for your deductible.

What is Medical Payments or Personal Injury Protection (PIP)?
If you or any passengers in your vehicle are injured in an accident, PIP will pay for treatment. In some cases, a PIP may extend to further medical costs like rehabilitation, and may also cover other expenses resulting from accident injuries such as lost wages, and even funeral costs.

What is Uninsured and Underinsured Motorist Coverage?
If you, or anyone else permitted to drive your vehicle is involved in an accident caused by an uninsured or hit-and-run driver and submit an auto insurance claim, this coverage will reimburse you for damage to your vehicle. It will also cover you if the other driver does not have sufficient insurance coverage to pay for a total loss of your vehicle. This coverage also protects you if you are hit by a vehicle as a pedestrian.

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