Auto insurance in USA is seen as a big deal today. A lot of people purchase vehicles as a form of investment, and when they do this, they try as much as possible to protect this investment.
The most popular way this is done is through auto insurance.
In this article, we’ll take a look at what auto insurance in the USA is as well as its different types and virtually everything it entails. We’ll also be looking at what auto insurance covers in USA and what it does not cover.
What is Auto Insurance
Auto insurance, simply put, is a type of insurance that protect people’s vehicles.
It is a policy that involves an insurance company (known as the insurer) who protects the vehicles of its customers (known as the insured) when situations like theft, accidents, damage or loss occur.
This protection however only becomes valid when the insured has paid the agreed annual premium based on the policy set down by the insurer.
As an insured person in an auto insurance agreement, once your vehicle gets stolen, involved in an accident or damaged by natural causes, the insurer saves you the the stress by bearing the financial burden that comes with the loss.
That’s basically what auto insurance is all about.
Types of Auto Insurance in USA
Although there are different types of auto insurances that are known to protect people when their vehicles get damaged or when they get involved in accidents, five of them are most common in the United States. They include:
Auto liability insurance
This type of auto insurance is compulsory for drivers in almost every state in USA. Drivers are required to legally get an auto liability insurance that is set by the state in which they find themselves in.
There are two known components of auto liability insurance:
i. Property damage liability insurance which pays for the damage you make to someone else’s vehicle
ii. Bodily injury liability which pays for the injury you cause to someone else’s body in the course of an accident
Auto comprehensive insurance
This type of auto insurance is used to pay for damages your vehicle suffer as a result of vandalism, hail, fire or theft. It does not apply to damages caused by accidents on the road.
Usually, auto comprehensive insurance helps to pay for damages suffered by your vehicle. But in a situation where the damage is so severe that the vehicle has to be replaced, you can only be given a new vehicle that is worth the actual cash value of the previous one.
Auto collision insurance
Just as the name implies, this type of auto insurance is used to pay for damages that are caused by accidents. These accidents could be as a result of hitting a fence, hitting an object, or even hitting another vehicle.
Just like an auto comprehensive insurance, if it happens that the damage is so severe that the vehicle has to be replaced, you can only be given a new vehicle that is worth the actual cash value of the previous one.
Medical payment insurance
Medical payment auto insurance is used to pay for the medical bills of you or passengers in your vehicle that suffer one injury or the other in the cause of an accident.
This cost for this medical bills might include cost of x-rays, surgeries or hospital visit for check-ups.
Personal injury protection insurance
Just line medical payment insurance, this type of auto insurance is used to pay for your medical expenses whenever you are involved in an accident. It also covers expenses caused by your injury like lost income or childcare expenses.
The only disadvantage is that it is not available in every state in USA.
What does Auto insurance in USA Cover
While you already know the different types of auto insurance in the United States, it is important to know that they cover in terms of damages caused to you and your vehicle.
One thing auto insurance in the United States is known to cover is property damage.
While driving, whatever damage that is caused to your car, someone else’s car, or someone else’s property like an utility pole, a store, a mall, a building or even a fence, will be paid for by your insurance company or insurer.
Another thing auto insurance in the United States covers is bodily injuries caused in the course of an accident.
This injuries range from the ones suffered by you to the ones suffered by your passengers, pedestrians, and other drivers.
What Auto Insurance in USA does not Cover
Now that you’ve known what auto insurance in the United States covers, here are some of the things it does not cover:
In a situation where the damage suffered by you or your vehicle is caused by natural disasters like wildfire, hurricane, flood or earthquake, your insurance company will not be held responsible for medical treatment or vehicle repair.
Natural disasters are usually excluded from most insurance policy in USA because they are considered as “acts of God.”
Auto insurance in USA does not cover stolen properties. In a situation where your vehicle gets vandalized, your insurance company is sure to pay for its repair since it is considered as property damage.
But in situation where your vehicle gets vandalized and personal properties are stolen from it, your insurance will not be held responsible for refund of those properties.
Sometimes, damages suffered by vehicles occur as a result of carelessness on the part of drivers. If this is you, your insurance company will not be held responsible.
For example, if you carelessly leave your key in your car with your windows open and it gets stolen, your insurance company won’t cover or pay for your loss.
Someone else’s vehicle
Another thing auto insurance does not cover in USA is damages done by you to someone else’s vehicle.
If, in the course of driving another vehicle that is not insured with your insurance company, you unfortunately get involved in an accident, both your medical expenses and expenses for repairing the vehicle will not be taken care of by the company.
Auto insurance in USA is basically centred around having ones vehicle protected by an insurance company when damages occur.
While this is true, it is important to note that vehicle protection for damages does not occur everytime as there are certain situations where one’s vehicle cannot be repaired by their insurance company.