Auto Coverage Basics


Types of common coverage:

  • Liability Coverage*
  • Collision Coverage*
  • Comprehensive Coverage*
  • Uninsured/Underinsured Motorist coverage*
  • Personal Injury Protection*


                 The main purpose of auto insurance is to provide protection financially against vehicle damage or injuries that result from traffic accidents. Auto Insurance also covers any liability that arises from these accidents. In addition auto insurance may provide protection against theft and other possible damages to the vehicle that do not occur due to traffic collisions. There are many reasons why you should get auto insurance, firstly protecting yourself from liability lawsuits, and also secondly protecting the investment you made in your automobile. It gives you a peace of mind and provides security to your vehicle.

Important Terms and Concepts

*Liability Coverage- There are two types of liability coverage - coverage for Bodily Injury and coverage for Personal Property. Most states require you to carry a minimum amount of liability coverage, or post a bond, to register your vehicle or obtain a driver's license.

*Collision Coverage- Comprehensive coverage pays for losses to the car resulting from fire, theft, falling objects, riots, storms, earthquakes, floods, and collision with a bird or animal. Comprehensive coverage is normally required if your vehicle is leased or financed.

*Comprehensive Coverage-Collision coverage pays for the damage to your vehicle resulting from accident with another vehicle or object.

*Personal Injury Protection- Personal Injury Protection (PIP) is generally required in no-fault states. PIP covers a broader range of medical costs than standard Medical Payments coverage. It covers lost wages and the replacement of the services of someone injured in an automobile accident.

*Uninsured/Underinsured Motorist Coverage- On average 25% of drivers have no insurance and another 30% do not have enough insurance. Uninsured/Underinsured Motorist coverage provides liability coverage if an uninsured/underinsured motorist is at fault.