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Automobile Insurance
Insurance is a contract between two parties, an insurance company and an individual or business. An insurance company promises to pay the individual or business for potential future losses. The individual or business promises to pay the insurance company a fee in advance called a premium.
People and businesses purchase insurance policies to protect their property and finances. There are three major categories of insurance. Life and health insurance covers death, hospitalization, disability, and hospitalization. Errors and omissions covers business operations. Property and casualty insurance covers personal property, real estate, and automobiles. This essay discusses automobile insurance.
What Is Auto Insurance?
If you have an accident in your car or it gets stolen or damaged auto insurance pays for your medical expenses and cost of repairing or replacing your car. It also pays another person if you are at fault for the accident. Auto insurance also protects your income and assets if you are sued for causing an auto accident.
What Does Auto Insurance Cover?
Liability coverage
Bodily injury liability covers injury to people, not your vehicle. But it does not cover you or other people on your policy. It pays for injury or death caused by you while driving your car.
It also pays for legal fees if a lawsuit is filed against you. Medical bills, loss of income, or pain and suffering may be covered.
Property damage liability pays for damage to another person’s property, generally their car. But coverage can include a house if it is damage by your car. This also covers legal defense if the other person files a lawsuit.
Physical damage coverage
Comprehensive coverage pays to repair any car (yours or another person’s) you drive for incidents such as theft, vandalism, flood or fire.
Collision coverage pays to repair your car if it hits, collides with, or crashes into another car. It also covers if another car hits your car. Finally, pays for damages if your car has a collision with or gets hit by some miscellaneous object.
Uninsured/underinsured motorist coverage
Underinsured motorist property damage coverage pays for damage to your car if the other person is at fault for an auto accident and has auto insurance, but it is not enough to cover your claims. It does not cover all repair or replacement costs. It only covers if the accident is caused by a driver who does not have enough liability insurance.
Uninsured motorist property damage coverage pays for damage to your car if the other person is at fault for an auto accident and has no auto insurance at all. It does not cover all repair or replacement costs. It only covers if the accident is caused by a driver who has absolutely no auto liability insurance.
Underinsured motorist bodily injury pays you, and your passengers for damages including injury or death caused by a person with insufficient insurance. This type of coverage makes up the difference between what the other driver’s insurance will cover and what your bodily injury portion will pay.
Uninsured motorist bodily injury pays you, and your passengers for damages including injury or death caused by a person with no insurance at all. It also covers hit and run accidents when the driver at fault cannot be found. Generally these drivers do not have insurance, so your policy will pay for damages and medical expenses.
Other coverage
Personal injury protection coverage pays for medical, hospital and funeral expenses regardless of who is at fault for the accident. It is not available in all states. It covers you, passengers in your car, and in most cases pedestrians that sustain injuries.
First party medical benefits is similar to medical payment and personal injury coverage. It pays for your medical expenses if you or others in your household are injured in an accident. What is covered vary by state. It includes: medical and surgical procedures; rehabilitation services such as physical therapy; dental, psychiatric, psychological, and optometry services; ambulance service ; medication and medical supplies.
Medical payments covers medical expenses if you or your passengers injured in an accident even as a pedestrian or cyclist regardless of who is at fault. It also covers you and your family members when they are injured as passengers in someone else's car.
Conclusion
Each state has laws regarding auto insurance. Most states require some minimum coverages. For example, California requires bodily injury liability of $15,000 with a $30,000alimit and $5,000 of property damage liability. While Ohio requires bodily injury of $12,500 with a $25,000 limit and $7,500 of property damage liability.
Insurance companies and their sales agents are required to be licensed and to take continuing education courses in most states. The agent helps you to pick the best types of coverages needed, and guides you through the process of making a claim if you do have an accident or a covered damage or loss.
References
CarInsurance.com. Car insurance learning resource center. Retrieved February 16, 2008, from http://www.carinsurance.com/LearningCenter.aspx
FreeAdvice.com. Insurance law - auto insurance center. Retrieved February 16, 2008, from http://law.freeadvice.com/insurance_law/auto_insurance/
InvestorWords.com. Insurance definition. Retrieved February 16, 2008, from http://www.investorwords.com/2510/insurance.html
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Understanding Auto Insurance: Coverage, Types, and Importance. (2020, Jun 01). Retrieved from https://studymoose.com/automobile-insurance-new-essay
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