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Auto Insurance

Auto Insurance in Mandatory in Most States

Driving provides a sense of freedom, but before you hit the road, it’s important to have sufficient auto insurance. Your state probably has minimum auto insurance requirements, and your car loan lender might also have specific requirements. By understanding the coverage and how it works, you can insure yourself against damaging situations on the road.

Liability, collision, and comprehensive coverage are three main types of auto insurance. In most states, liability coverage is mandatory. This is because many states require drivers to pay for any damages they cause. Liability only pays other parties for expenses that you create. Liability does not pay for any of your own vehicle repairs, medical expenses or missed wages. Also keep in mind that liability only pays expenses up to its limits.

If you want more than liability, then collision and comprehensive insurance pays for your repair work or for a full replacement. However, collision only pays for your expenses if the damage was caused by colliding with another vehicle. But comprehensive covers damages from a wider range of incidents.

In the event of a car loan, your lender may require specific coverage. But you still need coverage even if you do not have a car loan. Optional coverage includes compensation for towing, rental cars, personal injury, gap insurance and more.

Pay your auto insurance premium regularly or else the policy will lapse. If an accident occurs during this time, then you will not receive compensation. You will need to pay a deductible when filing a claim, so select a deductible within a reasonable range. It should be something easy for you to pay on a moment’s notice.