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Auto Insurance Coverage

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Auto insurance is a requirement for most states. You need first to determine what needs to be protected. Then you purchase insurance to cover yourself and your family against the various risk exposure. There are various types of coverage.

Liability Coverage
This is the minimum requirement in most states. It covers two liabilities:

Bodily Injury Liability. Covers other people's bodily injuries or death for which you are responsible. It also provides for a legal defense in the event you are sued. Claims for bodily injury may be for such things as medical bills, loss of income or pain and suffering. Bodily injury liability covers injury to people, not your vehicle. It is prudent to have the same level of coverage for your car. Bodily Injury Liability does not cover you or other people on your policy.

Property Damage Liability. Covers you if your car damages someone else's property and you are found at fault. It could be the other party’s car, a house, a fence or any other property damaged in the accident. It also provides you with legal defense in the event you are sued.

Physical Damage Coverage
It covers your vehicle. Pays to repair your vehicle less the deductible you choose. To keep your premiums low, select as high a deductible as you feel comfortable paying out of pocket. This is not required by a state. Under the following situation, it might be prudent for you to take up the coverage:

• If your car is financed or leased, the finance company will probably require that you carry this coverage.
• If you have a newer vehicle or one in excellent condition, you may need this coverage to replace or repair the vehicle in case of loss.

Collision Coverage
If you are found at fault in an accident, collision coverage covers expenses needed to repair your vehicle. Covers damage to your car when your car hits, or is hit by, another vehicle, or other object. Pays to fix your vehicle less the deductible you choose. This is not required by a state, but if you have a loan or a lease then the lien holder will require it.

• If your car is financed or leased, the finance company will probably require that you carry this coverage. •
• If you have a newer vehicle or one in excellent condition, you may need this coverage to replace or repair the vehicle in case of loss.

Source: Insurance Information Institute
http://www.iii.org