What is auto insurance?

Basic personal auto insurance is mandated by most states and provides you with some financial protection in case of an accident. But is it enough? What are the options? Learn how car insurance works and what types of coverage are available.

Auto insurance is a contract between you and the insurance company that protects you against financial loss in the event of an accident or theft. In exchange for your paying a premium, the insurance company agrees to pay your losses as outlined in your policy

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Who is covered by my auto insurance

Your auto policy will cover you and other family members on your policy, whether driving your car or someone else’s car. Your policy also provides coverage if someone who is not on your policy is driving your car with your consent.

Personal auto insurance will also not provide coverage if you use your car to provide transportation to others through a ride-sharing service such as Uber or Lyft. Some auto insurers, however, are now offering supplemental insurance products that extend coverage for vehicle owners providing ride-sharing services.

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What other types of auto insurance coverage

While most basic, legally mandated auto insurance covers the damage your car causes, it does notcover damage to your own car. To cover your own car, you should consider these optional coverages:

Collision reimburses you for damage to your car that occurs as a result of a collision with another vehicle or other a tree or guardrail when you’re at fault. While collision coverage will not reimburse you for mechanical failure or normal wear and tear on your car, it will cover damage from potholes or from rolling your car.

Comprehensive provides coverage against theft and damage caused by an incident other than a collision, such as fire, flood, vandalism, hail, falling rocks or trees and other hazards even getting hit by an asteroid!

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