What is Car Insurance?

Car insurance is the law - in all 50 states across the U.S. This does not mean that all laws are created equal or that the same coverage is required. What the laws of the states require is that if you are driving an automobile on public roads, that vehicle must have a minimum level of liability insurance. This “minimum level”; ranges from $10,000 per person per accident to up to $50,000 per person per accident, but is that all there is to car insurance? Car Insurance for Every Situation There is car insurance to protect you if your car is stolen, car insurance to protect your car if it gets hit by someone else, or if you run into buildings, other cars or other people. There is also insurance to protect you and your passengers if you are involved in an accident by providing for your medical expenses that come about as a result of the accident. While the cost of coverage will vary, the major types of auto insurance coverage are:

Liability - This insurance provides for the repair of a damaged vehicle or injury to another person involved in a collision with you. This is usually given in a three part number such as 10/20/50 with the first number representing the maximum amount of coverage for someone you injure in an accident ($10,000), the second being the maximum that will be paid for injuries to any number of people in the car ($20,000), and the third being the maximum covered costs to repair damage done to a vehicle ($50,000).

Comprehensive/Collision - This insurance provides “all around” coverage for your own vehicle if it is involved in an accident. While your car is under lease or if it has been bought with auto financing (loan) and is being paid off, many lenders will require that you carry comprehensive insurance on the vehicle in order to protect their investment. This insurance will pay to repair your own vehicle after an accident or possibly even replace it if it is totaled. Theft insurance; protection for your car if it is stolen - is also usually covered under comprehensive.

Uninsured/Underinsured Motorist - This insurance provides “reverse liability” protection for you in case you are involved in an accident that is someone else's fault...and they do not have the minimum insurance required by the sate or it is not enough to cover your vehicle damage or injuries. This insurance will kick in to pick up the tab - usually without raising your premiums as a result.

Rental Reimbursement - This insurance will help you to pay for (or completely cover) the cost of renting a vehicle if your car is ever disabled as a result of an accident or mechanical failure. While most people carry the minimum liability as required by their state law, you should consider carefully - especially if you are a homeowner - carrying more than the minimum requirements, especially if they are quite low. If your insurance does not cover the costs of an injury as a result of an accident, you can be personally sued to recover the rest. Those with substantial assets could quickly find themselves in court fighting off a $100,000 or $200,000 medical bill after a moderate to severe collision that they were ruled partially at fault for.