Auto Insurance: Basic Information Guide

Auto insurance as we know is the insurance coverage consumers purchase for their car, truck or other motor vehicle. The purpose of vehicle insurance is to protect the owner against financial loss due to accidents, theft and mishaps. Car insurance can cover the insured individual, the insured vehicle and third parties. The specific policy coverage purchased will spell out the situations under which each of these items is covered.

There are many different types of auto insurance coverage available. The policies vary with the requirements and wishes of the purchaser. As an example certain types of insurance policies include bodily injury liability, medical payments, property damage liability, and collision and comprehension coverage for physical damage to the insured vehicle.

In general, an auto insurance policy has five sections:

Declarations: This part of policy specifies personal information about the drivers in your household including names and address, make and model of the vehicle, vehicle identification number (VIN), policy number, duration etc. This part also shows the basic type of coverage that you purchased and the policy limits and deductibles. It is essential to provide accurate information in this area; otherwise insurance claims could be denied.

Coverage Parts: This lists the coverage limits for liability, medical, collision and comprehensive and any other options. This section outlines what your insurance company guarantees to provide in return for your payment, based on the chosen coverage and limits.

Exclusions: This contains brief explanations about what is not covered by your policy. You can identify what will not be covered when you make a claim and will enable you to make necessary changes in the policy.

Conditions: This segment is all about 'legitimacy' (i.e. the legal bindings) on the insurance provider and the insured. It includes premium payment obligations, steps required to file a claim, and guidance to resolve any disputes.

Definitions: Also referred to as 'the fine print', this section defines the terms and the rights of the policyholder and the insurance company.

Auto insurance is mandatory in all states for driving on public roads. You are required to at least have third party insurance to protect others against injury or damage by your vehicle. You may or may not choose to purchase insurance coverage against loss or damage to your own vehicle.

Do you know what coverage is included in your policy?  It is essential to know what basic points of coverage your insurance company should be offering you. The following coverage is highly recommended:

• Bodily Injury Liability: Covers any injuries you (and anyone listed on your policy) cause to someone else.
• Personal Injury Protection: Covers medical expenses incurred if you or a family member is injured in an accident.  This can also cover lost wages, and even burial expenses.
• Property Damage Liability: Coverage in the event you cause any property damage in an accident.
• Collision: Pays for any damage to your car in an accident.
• Comprehensive: This coverage is optional in many states. It pays for any damage that is not caused by another vehicle.  This usually includes theft, earthquakes, floods, riots, collisions with animals, and falling objects.
• Uninsured Motorist: Covers you if the other driver is not have insurance. It also provides coverage in the case of a hit-and-run accident.