Insurance Machine

If you drive a car you need car insurance. Most states require it by law. When you buy car insurance, you buy ‘a policy’. Your car insurance policy is based on a variety of factors including what kind of car you drive as well as what kind of insurance you want. Car insurance policies are actually a package of different types of insurance coverage.

The first step in understanding a car insurance policy is to learn the various types of coverage insurance companies offer. Some of this coverage may be required by your state and some of the coverage may be optional.

Liability coverage - This pays for accidental bodily injury and property damages to others. Injury damages include medical expenses, pain and suffering and lost wages. Property damage includes damaged property and automobiles. This coverage also pays defense and court costs. State laws determine how much liability coverage you must purchase, but you can always get more coverage than your state requires.

Collision coverage - This pays for damages to your vehicle caused by collision with another vehicle or object.

Comprehensive coverage - This pays for loss or damage to the insured vehicle that doesn't occur in an auto accident. The types of damages comprehensive insurance covers include loss caused by fire, wind, hail, flood, vandalism or theft.