How much auto insurance is necessary?
An auto insurance policy is comprised of seven 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.
- Liability – Pays for bodily injury and property damage caused to the other vehicle and/or other property when you are found to be at fault in an accident.
- Medical Payments –Covers the cost of treating injuries caused to the driver, family members, or other passengers in your vehicle if they are injured as a result of an accident caused by you.
- Collision – For damage to the policyholder’s car from a collision. The collision could be with another car, a light post, fire hydrant, etc.
- Comprehensive – For damage to the policyholder’s car that doesn’t involve a collision with another car. Covered risks include fire, theft, animal damage, falling objects, weather damage, etc.
- Uninsured Motorists – Provides bodily injury and property damage coverage to the policyholder in an accident that is the fault of another driver who does not have insurance, or in cases where that driver leaves the scene of the accident.
- Under-Insured Motorists – Provides bodily injury and property damage coverage to the policyholder in the event of an accident caused by another driver, where that driver is at-fault, but doesn’t have enough insurance to cover the injuries or damage caused in the accident.
- Towing / Rental Reimbursement Coverage – Towing coverage provides reimbursement for towing-related expenses for your vehicle in the event of an accident or a breakdown. Rental Reimbursement coverage provides alternate transportation in the event that your vehicle is damaged in an accident, stolen, lost, or has coverage from some other covered loss.
Each state requires that you have certain types of coverages with minimum liability limits. The insurance industry recommends that your bodily injury liability limits be $100,000 per person and $300,000 per occurrence.With Permission © Insurance Information Institute, Inc. – ALL RIGHTS RESERVED –