Auto insurance protects you against financial loss if you have an accident or some other disaster would happen to damage your car. It is a contract between you and the insurance company. You agree to pay the insurance company (premium) and the insurance company agrees to pay your losses as described in your policy. Auto insurance provides property, liability and medical coverage:
- Property coverage pays for damage to or theft of your car.
- Liability coverage pays for your legal responsibility to others for bodily injury or property damage. (required by law in most states).
- Medical coverage pays for the cost of injuries, rehabilitation and sometimes lost wages and other expenses such as funeral.
An auto insurance policy is comprised of six different kinds of coverage. Most states require you to buy some, but not all, of these coverage’s. Banks may require you to purchase a certain amount of coverage as they want to protect their investment.