Auto Insurance Laws

Car insurance laws vary from state to state, but all states have auto insurance coverage requirements that require some type of car insurance or proof of financial responsibility. Even though it may seem like an “extra” cost, car insurance protects you, your family and your vehicle if you’re ever in an accident or if your vehicle is damaged.

Several factors, including your driving record and insurance history, affect the type of insurance policy available to you. If you have a clean driving record and have been insured in the past, you’ll most likely qualify for standard auto insurance coverage.

Generally, if you haven’t had insurance, or have a less-than-perfect driving record, you can still qualify for auto insurance. This type of insurance is known as non-standard auto insurance.

Your auto insurance coverage requirements may include six coverages. Each type of insurance coverage is priced separately.

• Bodily Injury Liability
  • This coverage applies to injuries that you, the designated driver or policyholder, cause to someone else. You and family members listed on the policy are also covered when driving someone else’s car with their permission
  • It’s very important to have enough liability insurance because if you’re involved in a serious accident, you may be sued for a large sum of money. Definitely consider buying more than the state auto insurance coverage requirement minimum to protect your assets, such as your home and savings
    
    
• Medical Payments or Personal Injury Protection (PIP)
  • This coverage pays for the treatment of injuries to the driver and passengers of the policyholder’s car. At its broadest, PIP can cover medical payments, lost wages and the cost of replacing services normally performed by someone injured in an auto accident. It may also cover funeral costs
    
    
• Property Damage Liability
  • This auto insurance coverage pays for damage you (or someone driving the car with your permission) may cause to someone else’s property. Usually, this means damage to someone else’s car, but it also includes damage to lamp posts, telephone poles, fences, buildings or other structures your car hits
    
    
• Collision Coverage
  • This coverage pays for damage to your car resulting from a collision with another car or object or as a result of flipping over. It also covers damage caused by potholes
    
    
• Comprehensive Coverage
  • This coverage reimburses you for loss due to theft or damage caused by something other than a collision with another car or object. Damage might be caused by fire, falling objects, earthquakes, windstorms, hail, floods, vandalism, or contact with animals such as birds or deer
  • States do not require that you purchase collision or comprehensive coverage. But, if you have a car loan, your lender may insist you carry it until you repay your loan
    
    
• Uninsured and Underinsured Motorist Coverage
  • This coverage reimburses you, a member of your family or a designated driver if one of you is hit by an uninsured or hit-and-run driver
  • Underinsured motorist coverage comes into play when an at-fault driver doesn’t have enough insurance to pay for your total loss. This coverage will also protect you if you’re hit as a pedestrian
    
    

For more on car insurance education, log on to www.aspira.org and click on the Community Wealth Development Initiative link.