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Car Insurance Explained

Car Insurance Coverages Explained
An Car Insurance policy actually consists of several different coverages. Required in most states, it is something all drivers must posses.

Liability Insurance
This coverage is the basis of all Car Insurance policies, and the minimum required in most states. If you’re found at fault in an accident, liability insurance pays for the injury and property damage expenses of the third party involved in the accident. Property damage pays for the replacement or repair of anything that was damaged. Bodily injury expenses cover lost wages and medical bills. If you cause a major accident, your current or potential coverage may not cover you sufficiently. It is a safe bet to buy more than the minimum required by your state.

Collision
If you’re found at fault in an accident, collision coverage will cover expenses needed to repair your vehicle. Collision coverage is usually the most expensive component of an Car Insurance policy, although it isn’t required. Insurance companies might proclaim your car a “total loss” if the repairs exceed the market value of the car. When this occurs, the insurance company will pay you the actual cash value, minus the deductible. From there your car is off to an auction where it will be sold for parts or scrap.

To learn more about Car Insurance Click Here.

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Contributed by onlysc on September 25, 2008, at 1:45 PM UTC.

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