Auto insurance helps following an accident in a number of ways. The vehicle owner’s policy is made up of two different types of protection: liability and physical damage coverage.
Liability Auto Insurance Coverage
Third-party liability auto insurance coverage is put in place to pay for damages that the driver causes an accident. Without this type of protection in place, the at-fault driver in an accident would be responsible for paying for these costs personally.
The liability portion of the policy pays out for bodily injury and property damage claims. The bodily injury portion of the policy pays for medical bills, rehabilitation expenses and lost wages following an accident incurred by the occupants of the other vehicle. In some states, this type of coverage also compensates accident victims for their pain and suffering.
Property damage liability coverage pays for the cost to repair the other driver’s vehicle following an at-fault accident. It also pays for repairs to any public property which was damaged or destroyed in the event. Public property, in this instance includes items like mailboxes, signposts, sidewalks, fences and guard rails.
Physical Damage Auto Insurance
The physical damage part of the policy pays for repairs to your own vehicle. It is also made up of two components: collision and comprehensive coverage.
The collision part of the policy pays out when the damage to the vehicle is caused by making contact with another object (including a vehicle) or in a rollover accident. You will need to pay your policy deductible before the auto insurance company will cover these repairs.
Comprehensive auto insurance coverage pays out when the damage to the vehicle is caused by an event other than a collision. It protects against damage caused by several types of events, including a flying pebble striking the windshield and causing a crack, striking an animal, hail or flooding. You would also need to pay your policy deductible before the insurance company would pay out for this type of claim.
Driving Without Auto Insurance Coverage
The person driving without auto insurance coverage in place is taking a major financial risk. He or she would be personally responsible for paying for any damages caused in the accident, as well as repairs to his or her own vehicle.
Driving without auto insurance coverage in place also means being subject to civil penalties. His or her driver’s license and/or registration may be suspended for a certain time. A reinstatement fee will need to be paid to have driving privileges restored.
This type of lapse in coverage can also make it challenging to get auto insurance going forward. A number of auto insurance providers will not cover a driver whose license has been suspended.
A much better choice is to maintain at least the minimum level of coverage required by law in place at all times. The amount paid for auto insurance premiums is a good investment, since it provides a higher level of protection if an accident occurs than the amount being paid out by the policyholder.