Auto insurance coverage is a product that vehicle owners buy to protect their assets. It is required by law in most parts of the United States, and is made up of two components: liability and physical damage protection.
Liability insurance provides financial protection to the vehicle owner in case he or she is the at-fault driver in an accident. In tort states, the driver who is determined to be legally responsible for the accident is responsible for paying for the damages her or she caused. These damages include compensating accident victims for medical expenses and lost wages. Bodily injury liability coverage also includes paying a funeral benefit if the accident was a fatal one.
Property damage liability coverage is used to pay for repairs to the other driver’s vehicle. If the other car is totaled, it pays out based on the vehicle’s cash value. This coverage also pays for repairs to public property damaged in the accident, including buildings, sheds, fences, light stands and sign posts.
Physical damage coverage available to vehicle owners includes collision and comprehensive protection. Collision coverage pays for repair costs of the vehicle is damaged in an accident where it strikes an inanimate object or rolls over. Comprehensive insurance also pays for repairs to the policyholder’s own vehicle, but it covers events other than a collision, such as damage caused by vandals, a fire or severe weather. It also pays out a benefit if the car is stolen.