What is Auto Insurance?
Auto insurance – vehicle insurance, or motor insurance – is an insurance policy to cover road vehicles and operators. The most common type is car insurance due to it being a requirement for all drivers.
Auto insurance typically involves a contract with an insurer, in exchange for a premium they agree to cover financial losses up to a certain amount in the case of certain events covered by the contract. While there are many different types of vehicle coverages, with some meaningful differences, they all work similar in regards to costs and coverage.
This video is a great start to understanding the basics of auto insurance. Just keep in mind some specifics can change from state-to-state and overtime as laws change.
What Does Auto Insurance Cover?
While there are many kinds of vehicle insurances (which we cover in depth in our auto insurance section), in its most basic form, vehicle insurance provides protection against potential financial liabilities and costs that can arise from incidents on the road. These protections may include guards against physical damage and bodily injury from traffic collisions, auto theft, damages to your vehicle, costs accruing from a vehicle that breaks, and others still.
Generally the following is true about all auto insurance types:
- Auto insurance provides property coverage for damage or theft.
- Auto insurance provides liability coverage for an operator’s legal responsibility to others for bodily injury or property damage.
- Auto insurance provides medical coverage for the cost of treating injuries and rehabilitation.
- Sometimes auto insurance also provides coverage for lost wages, funeral expenses, or other financial losses the insured may incur.
The specific costs that are protected against by vehicle insurance depend on your specific car insurance policy.
Anyone who drives or owns a car should know the basics of car insurance and the specifics of the coverage types that apply to their situation.