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Insurance
Automobile Insurance |
Automobile insurance is
designed to protect you from legal liabilities, medical costs, or physical damage
resulting from the ownership or operation of a vehicle. By pooling the risks of many
drivers, insurance companies are able to compensate individual policyholders with large
payouts when required.
The Big Four
Auto insurance policies are actually groups of different individual coverages. Each one
protects you from a specific loss. You'll be ready to buy insurance for your car once
you've mastered the various coverages.
Your policy should include the following four basic types of coverage.
1) Liability Coverage
Perhaps the most vital part of your insurance policy. Liability coverage protects you from
lawsuits. It covers your legal costs should you cause an accident and get sued.
This type of coverage is normally sold with split limits -- 100,000/300,000/50,000. The
first number represents the maximum your insurance company will pay for bodily injury for
any one individual. The second number is the maximum per accident. The last is the maximum
amount paid for property damage.
There are two types of liability:
- Bodily Injury - Pays for medical costs, pain and suffering, and lost
income for others injured in an accident for which you're responsible.
- Property Damage - Pays for damage to another person's vehicle or
property for which you're responsible.
2) Medical Payments
Medical payments cover the doctor bills or funeral costs you and your passengers
incur if injured in an auto accident. The coverage applies even when driving a friend's
car or walking as a pedestrian. The standard amount of coverage for medical payments is
$1,000 to $10,000.
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