Understanding Basics of Auto Insurance
In the United States it is mandatory to have auto or car insurance in order to drive. Every state in the U.S. has minimum laws for auto insurance and most of the states has made compulsory for the vehicle owners to have at least some type of liability insurance to protect other drivers driving on the road. U.S. auto insurance is a contract between the insurance company and the vehicle owner to provide coverage against the financial loss in case of an accident or theft. The vehicle owners pay a premium amount to the insurance company, who in return agrees to pay the losses like damage to the vehicle or theft of the vehicle. Driving without insurance will impose a fine on the vehicle owners and their license will be revoked and they can even land up in prison.
Types of Auto Insurance Coverage
Types of Auto Insurance Coverage
Majority of the auto insurance companies offer three primary types of coverage, which include liability, collision, and comprehensive. Each type has its own range of coverage and may include some additional services. The price for each of this coverage varies, and the plan with less quality coverage is less expensive compared to plan with more quality coverage. Now let us take a closer look at the different types of coverage to know about the protection offered by these components:
Liability – To be a legally insured driver in the U.S., vehicle owners need to have this bare minimum level of coverage in most of the states. The liability coverage protects vehicle owners, driver in cases when they are responsible for an accident or if they are held responsible, even if they did not technically cause the accident. Besides, this coverage also includes damages, medical expenses, lost wages and other consequences damages suffered by those who got injured as a result of the accident. This coverage has two components:
- Bodily Injury Liability – This type of auto insurance coverage helps to pay for costs of another person’s injuries, if the accident occurs due to the insured vehicle owner.
- Property Damage Liability – If the insured vehicle owner cause damage to another person’s property while driving then they are covered to pay for the damage.
Collision – This level of coverage include coverage for vehicle repairs, which need to be done as a result of a traffic accident, irrespective of the person at fault. This coverage also includes property damage and any damage caused to the vehicle due to collision with buildings, trees, etc. This coverage also comes with a replace option, which means that if the vehicle is declared “totaled” by the insurance company, then the vehicle owners either obtain a replacement vehicle of the same market value or receive down payment for another vehicle to purchase
Comprehensive Coverage – With this type of coverage vehicle owners will receive replacement of the vehicle if it gets stolen or damaged by natural disasters. Comprehensive coverage also include some random events that are beyond control like vandalism, riots, fire, explosions, windshield and glass damage, falling trees, branches and other objects, storms, floods, hail, earthquake and lightning.
Uninsured and Under-insured Motorist Coverage – If the insured vehicle owner get hit by a driver who doesn’t have auto insurance, then uninsured motorist coverage may helps vehicle owner pay for his/her medical bills or in some states even repair cost of the vehicle. In case if the insured vehicle owner get hit by an under-insured driver, which means that they have car insurance but their liability limits are not enough to cover the medical bills of the injured vehicle owner, then this under-insured motorist coverage can help. This coverage is mandated in some states whereas optional in other states.
Medical Payments Coverage – If the insured vehicle owner, their passengers or family members who are driving the insured vehicle get injured in an accident, then this type of coverage help to pay for the expenses associated with the treatment of the injuries. The covered medical costs include hospital visits, surgery, x-rays and other medical services.
Personal Injury Protection – Personal Injury Protection coverage help pay for the medical expenses after an accident along with other expenses incurred due to the injuries like lost income or child care expenses.
However, vehicle owners should keep in mind that each of these coverage level include just basic categories and every auto insurance companies have their own distinct coverage and policy provisions. Vehicle owners need to first discover about their coverage requirements along with other beneficial features they wish to have.
Who is Covered and Under What Circumstances?
Auto insurance policy generally cover the insured vehicle owners and their family members on their policy, irrespective whether they are driving their own car or someone else car with their permission. The policy will also cover the third person who is not included in the policy, if that person is driving their car with their consent.
This auto insurance policy covers only personal driving either one is commuting to work, driving for shopping or taking a vacation trip. The policy will not provide coverage if the vehicle is used for commercial purposes or if it is used to provide transportation facility to others through a ride sharing services. For ride sharing coverage, vehicle owners need to obtain supplemental insurance products.
Leading Auto Insurance Companies of the U.S.
Car insurance is mandatory for every vehicle owner in the United states and even state car insurance regulations mandate vehicle owners to have some sort of insurance coverage, as no vehicle owners would love to spend thousands of dollars for vehicle or property repairs or medical costs in case of an accident. Car insurance policy is purchased from an auto insurance company by paying them an annual premium who in case of an accident provide a claim that covers financial losses of the vehicle owner that occurred due to the accident. Vehicle owners look to get a good deal on car insurance, as they wish to strike a fine balance between their coverage and annual premiums. To help vehicle owners in their mission of finding best auto insurance policy find below some best and affordable auto insurance companies of the U.S.
- State Farm
- American Family
However, U.S. residents need to keep in mind that only USAA, Geico, State Farm and Allstate are available in all 50 states and the District of Columbia.