Car Insurance
Most Americans' most significant liability exposures result from the ownership and/or use of a car. More people in America are sued for injuries and damages resulting from traffic accidents than for any other reason. Therefore, if you own or drive a car, you should purchase car insurance (also know as automobile insurance). Car insurance policies provide four types of coverages.
The first coverage is auto liability insurance coverage. Liability coverage protects you in the event of a claim or lawsuit for injuries or damages arising from an auto accident while you are driving. As an example, assume you are at fault for a vehicle accident wherein the other vehicle is damaged and the other driver is injured. Your auto liability insurance would pay for the damages to the other driver's car, as well as pay the other driver for any injuries he sustained. If the other driver sues you, your insurance policy will hire an attorney and defend you against the lawsuit.
In addition to protecting yourself, all states require, by law, that car owners purchase automobile liability insurance. Failure to purchase automobile liability insurance can result in suspension of your driver's license. The liability coverage has no deductible which means all liability losses are paid for by the insurance carrier.
The second type of coverage is property insurance for your vehicle. This property insurance pays for repairs to, or for the replacement of your car if it is damaged in an accident. This coverage is optional if you own your vehicle completely. However, if you have a car loan, which most Americans do, then the lender of the car loan will generally require you to purchase property insurance on the vehicle. Lenders want to ensure there are insurance proceeds available to pay for their interest in the vehicle if the car is damaged or destroyed.
The third type of coverage is medical payments coverage. This coverage pays the medical expenses of persons who are injured while occupying your car, regardless of who is at fault for the injuries. This coverage generally has a low limit such as $2500 per person.
The fourth type of coverage is Uninsured Motorist Coverage. This coverage is unique to auto insurance. It is designed to pay you if you are involved in an auto accident caused by another person that is either an unidentified hit and run driver or has no auto liability insurance. In other words, if you are injured in an auto accident by another driver that has no auto liability insurance, your uninsured motorist coverage will pay you what the other driver's insurance would have paid had the other driver had insurance. Many states do not require you to purchase this insurance. However, it is recommended that you purchase this insurance. If you do not and you are injured in an auto accident caused by someone with no insurance, there will be no insurance funds for your injuries.
Almost all insurance agents sell auto insurance. You can generally receive a discount if you also purchase your homeowners insurance from the same insurance company. As always, consult with your insurance agent for advice.