Insurance is nothing but a contract between a policyholder and the insurer. In the case of auto insurance the insurer covers any financial losses if an accident occurs. The insurance mainly covers:
- Any damage due to accident or in case the vehicle is stolen.
- During the accident if the driver or third party get hurts and are injured, the insurer will bear the medical expenses.
- If there is any property damage, then it is the responsibility of the insurer to cover those things.
There are six types of coverage. These are detailed below…
- Bodily Injury Liability: This coverage is applied when the policyholder causes any injury to a third party. If family members are also listed in the policy then it will be applicable to them too.
For example, you or any member of your family, who is listed in the policy, is driving a car. Then an accident happens and someone gets hurt. Then a large amount of money can be claimed against you or your family member. Under this coverage the insurer will pay all these expenses.
- Medical Payments or Personal Injury Protection (PIP): It covers the medical expenses due to an accident. If the person is hospitalized and can’t go to the workplace then the policy will cover lost wages. It also bears the cost of funeral expenses.
- Property Damage Liability: If you damage someone else’s property then the insurer under this coverage pays the losses. The damage could be to someone’s car, or public property like telephone posts, lamppost, building, fences or any structure.
- Collision: During the accident your car collides with another car, and suffers heavy damages. Under this cover the insurer reimburses the expenses of repair.
- Comprehensive: Under this coverage you are reimbursed from every possible damages. The possible causes are collision, theft, fire or any other. If the windshield is damaged then under this cover it is repaired or replaced with a new one.
- Uninsured and Underinsured Motorists Coverage: If an uninsured motorist hits you then this coverage will reimburse the losses. If the motorist is underinsured and the amount of the reimbursement is insufficient then this cover will reimburse the required money.