Personal Auto Insurance Coverage Basics for Drivers

Arranging for auto insurance coverage is a necessary part of buying a new vehicle. The new owner is required to demonstrate proof of coverage before the vehicle is driven off the dealer’s lot. A person who has never bought insurance before needs to understand his or her coverage options before choosing a policy.

Third Party Liability Coverage

This type of insurance protects the driver by covering claims made by the other driver and his or her passengers when an accident occurs. It pays for medical bills, rehabilitation expenses and lost wages incurred as a result of the accident. In some states, accident victims also have the right to sue to collect damages for pain and suffering. Liability insurance also pays for property damage claims for repairs to other people’s property as a result of the accident.

Physical Damage Coverage

Physical damage auto insurance coverage is put in place to pay for repairs to the driver’s own vehicle if an accident occurs. This type of insurance will probably be required if the owner took out a loan to pay for the vehicle, since the financing company will want to be sure that its interests are protected. Collision coverage pays for repairs to the vehicle if it is damaged in an accident which involves striking another vehicle or an object, or where the car rolls over. Comprehensive auto insurance coverage pays out when the damage is caused by an event other than a collision. It covers claims arising from events like a fire, acts of vandalism, theft, hail, flooding or hitting an animal.



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