Understanding The Importance Of Motorcycle Insurance

3 Common Auto Insurance Plans That Every Car Owner Should Know

by Raymond Gibson

If you have a car or plan to buy one, you need to understand the various components of an auto insurance policy. In other words, you should know the different types of coverage available. These auto insurance plans are available to help protect you, your vehicle, and passengers in case of an accident. Depending on your state of residence, some of these coverages are optional, while others are mandatory.

Here are the three most common auto insurance plans that every car owner should know:

Liability Coverage

Auto liability coverage is compulsory in most US states. This auto insurance plan provides you with protection against claims if an accident results in damages to other people's property or injuries.

The policy covers payouts you are responsible for if you are legally liable for the accident. In fact, it caters to all legal costs that might result from an accident. Unlike other auto insurance plans, a liability insurance policy only compensates third parties and not policyholders.

Underinsured or Uninsured Coverage

What if the person responsible for the accident doesn't have enough insurance or doesn't have one at all? You would have to pay out-of-pocket for all the expenses. Fortunately, that's where underinsured or uninsured coverage comes in.

This auto insurance policy protects you from unprotected motorists. It can be of significant help if the driver who hit your car doesn't have enough liability coverage. In such a case, you don't have to use your money to pay hospital bills and car repair expenses for an accident you didn't cause. 

The most reasonable and appropriate thing is to file a claim with the other driver's insurance firm to recoup compensation for medical and car repair expenses.

Collision Coverage

Collision insurance is among the most essential auto insurance plans today. The policy helps you replace or repair a damaged vehicle in an accident. The plan covers your car if it sustains severe damages from:

  • A collision with a foreign object, such as a tree or fence.
  • A collision with another car or truck.
  • An accident that involves falling or rolling over.

However, the plan can't cover you if the damages are a result of other elements not related to driving, such as theft or storms. It doesn't also pay for medical bills or damages to other people's property. 

Understanding different auto insurance plans and what they cover can help you select the right coverage for your unique situation. However, you need to check if a plan is optional or mandatory in your state before you settle for it. For more information, contact a company such as Arrowstar.