Understanding Auto Insurance 

Auto insurance is a contact between you and the insurance company that protects you against financial loss in the event of an accident or theft. In exchange for your paying a premium, the insurance company agrees to pay your losses as outlined in your policy. Auto insurance provides coverage for:

• Property- Such as damage to or theft of your vehicle.
• Liability- your legal responsibility  to others for bodily injury or property damage.
• Medical- the cost of treating  injuries, rehabilitation and sometimes lost wages and funeral expenses.

Basic personal auto insurance is mandated by most U.S. states, and laws vary. Auto insurance coverages are priced individually (a la carte) to let you customize coverage amounts to suit your exact needs and budget.

Policies are generally issued for 6 month or 1 yr time frames and are renewable. The insurance company sends a notice when it’s time to renew the policy and pay your premium.

Your Policy will cover you and other family members on your policy, whether driving your car or someone else’s car(with permission). Your policy also provides coverage if someone who is not on your policy is driving your car with your consent. Your personal auto policy only covers personal driving, whether you’re commuting to work, running errands or taking a trip. It will not provide coverage if you use your car for commercial purposes- for instance, if you deliver pizzas.

Personal auto insurance will also not provide coverage if you use your car to provide transportation to others through a ride sharing service such as Uber or Lyfy. Some auto insurers, however are now offering supplemental insurance products (at an additional cost) that extend coverage for vehicle owners providing ride sharing services. Auto insurance requirements vary  from state to state. If you’re financing a car, your lender may also have it’s own requirements.

Collision and comprehensive only cover the market value of your car, not what you paid for it and new cars depreciate quickly. If your car is totaled or stolen, there may be a “gap” between what you owe and your insurance coverage. To cover this you may want to look into purchasing gap insurance to pay the difference.