According to the National Safety Council, the average cost of property damage in a traffic crash runs about $8,900. A disabling injury that isn’t fatal can run $78,900 while a death can reach $1.4 million. Unless you’re independently wealthy, these costs can wipe you out financially and don’t even include the time you’ll spend missing work or trying to recover from any medical problems.
Auto insurance is designed to help you weather this financial crisis. In exchange for a small premium that you pay anywhere from monthly to yearly, the insurance company will compensate you for any damage to property or body that you suffer. It sends a claims adjuster to assess the damage and determine what compensation is necessary. In addition, the company can get your vehicle repaired, arrange for medical treatment, and help with any lawsuits.
All drivers need auto insurance and many states require it as a condition of owning a vehicle. Coverage typically covers the following:
•Collision: This coverage pays for the repairs to your vehicle unless your car is beyond repair. In that case, insurance pays you the value of your auto.
•Liability: If you are held responsible for the accident, liability coverage takes care of fixing any property you damage and pays for any medical bills and lawsuits resulting from the accident.
•Comprehensive: If your car is damaged by something other than an accident, such as if a tree falls on it or it is stolen, comprehensive coverage takes care of the loss.
•Personal Injury Protection: This coverage, which is not available in all states, pays the medical bills of you or your passengers irregardless of who caused the accident.
•Uninsured/Underinsured Motorist Protection: If the other party in the accident does not have enough coverage or is not carrying insurance, he or she many not be able to pay your expenses. In that case, this coverage compensates you.
The cost of insurance depends on the type of vehicle you drive, the amount of driving you do, your location, age, and gender. The deduction, which is the amount you pay during an accident before insurance kicks in, can also determine your monthly premium. The higher your deduction, then the lower the monthly premium that you have to pay.