Published : 13 years ago, on 18/05/2012

With the spread of different insurance schemes offering numerous protection solutions to individuals, Auto insurance holds a special place. Auto insurance protects you against financial loss if you have an accident. It is a contract between you and the insurance company. According to the contract, you agree to pay the premium and the insurance company agrees to pay your losses as defined in your policy. Auto insurance covers property, liability and medical expenses as well.

1. The Property coverage pays for damage to or theft of your car.
2. The Liability coverage offers solutions to your legal responsibility to instances arising from bodily injury or property damage.
3. Medical coverage enables you to pay for the cost of treating injuries, rehabilitation and funeral expenses.

The auto insurance policy can be categorized into 6 different categories. Most auto policies are for six months to a year. And it is the responsibility of your insurance company to notify you (by mail) the time for the renewal of your policy and also making a payment for the premiums.

Different types of Auto insurance schemes.
Auto insurance policies contain six types of coverage. As discussed earlier, most auto policies are purchased for a period ranging from six months to one year.

The most basic type is liability coverage. This coverage offers you with a shield during an accident. Ideally, one can opt for the liability coverage if you own your own vehicle.   If the vehicle is financed, the lender, and the insurance company, will advise you to acquire the full coverage. A full coverage policy may include six types of coverage, or some combination thereof.

Property Damage Liability
Say, for instance, your vehicle has caused damaged to someone else’s property, it doesn’t matter whether you were driving the vehicle or not, you can rely on the property damage liability coverage. In vehicle accidents, this usually means someone else’s car is damaged. But this coverage also includes damage to other types of property, both private and public, which may include fences, guardrails, telephone poles, homes or other buildings, or any other structures your car may have hit.

Bodily Injury Liability
If, in case, you (the policy holder) or any of your family members cause injuries to someone else, this coverage offers you resistance against such a situation. It applies whether the injury is caused when you are driving your own vehicle, or you’re driving someone else’s vehicle with their permission.
One should always opt for an auto insurance to stay protected against any event of a serious accident, which can also cause the other party sue you for damages. There are certain minimum requirement laws for this coverage, but you may want to consider increasing the amount of coverage in your policy to protect your assets in case of litigation.

Comprehensive coverage
In situations, where you lose your car in scenarios, when it is either stolen or damaged after an accident with another vehicle, you can rely on this coverage reimbursing the expenses you may have incurred during such scenarios. Natural disasters like tornadoes or earthquakes, hail, falling objects, vandalism, fire, or colliding with animals such as deer or birds can cause damage ranging from a few pounds to total loss.
Moreover, this coverage also offers you a cover against any damage caused to your car’s windshield. Glass coverage may be provided with or without a deductible, depending on the company.

Collision coverage
As the name states, this coverage pays if your vehicle is damaged as a result of colliding with another car or object, or if your car flips over. This also covers any damage caused to your vehicle due to potholes. On the other hand, if the accident is due to the policy holder’s fault, this coverage will ensure that you can recover the cost of repairing your vehicle, minus the deductible.

Medical Payments or Personal Injury Protection (PIP)
These coverage offers treatment expenses for any accidents encountered by the passengers in your vehicle. PIP, may also extend to medical costs like rehabilitation, and may also cover other expenses resulting from accident injuries such as lost wages, and even funeral costs.

Uninsured and Underinsured Motorist Coverage
If you, or anyone else permitted to drive your vehicle is involved in an accident caused by an uninsured or hit-and-run driver and submit an auto insurance claim, this coverage will reimburse you for damage to your vehicle. This insurance also covers the coverage expenses for the driver who doesn’t have sufficient coverage. This coverage also protects you if you are hit by a vehicle as a pedestrian.