Auto Insurance Basics

A contract for auto insurance exists between the policyholder and the insurance provider.

The insurance company agrees to reimburse damages as specified in the policy, and the policyholder agrees to pay the premium.

If the car is damaged or stolen, property insurance will cover the costs.

The policyholder's legal obligation to others for bodily harm or property damage is covered by liability coverage.

Medical insurance covers the cost of medical care, rehabilitation, and occasionally lost wages and burial costs.

Before they are able to legally operate a vehicle, drivers are typically required to obtain auto liability insurance.

(When the policyholder is at fault in an auto accident, liability insurance pays the other driver's medical, automobile repair, and other costs.)

All states have regulations defining the minimum amounts of coverage required by drivers, as well as other forms of financial security, in the event of an accident.