What is auto insurance?

Auto insurance protects you against financial loss if you have an accident. It is a contract between you and the insurance company. You agree to pay the premium and the insurance company agrees to pay your losses as defined 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.
• Medical coverage pays for the cost of treating injuries, rehabilitation and sometimes lost wages and funeral expenses.

An auto insurance policy is comprised of six different kinds of coverage. Most states require you to buy some, but not all, of these coverages. If you're financing a car, your lender may also have requirements. Most auto policies are for six months to a year.

Why do you need auto insurance?

1. It’s the law. In virtually every state, you must carry car insurance or face criminal fines. Repeated offenses could lead to the loss of your driver’s license and even a jail sentence.
2. Your car is an important asset. For many people, a car is the second-most-expensive purchase they will make in their lives, next to the purchase of a home. Vehicles are essential not just because they’re expensive, but also because of the service they provide to families. Car insurance is a way to protect that important asset.
3. Your lender will always want to be paid. If you have an accident and can’t afford to get your vehicle repaired because you don’t have car insurance, the company that provided you a car loan won’t stop asking for monthly payments. Car insurance is one way to help ensure that you can continue to make your car loan payments.
4. Cars get you to work. If you decide to forgo insurance and then get into an accident and sustain damage you can’t afford to repair, that doesn’t affect your need to get to and from work and make other necessary daily trips. Car insurance helps pay for car repairs so you continue to make your daily trips.
5. The cost of a major accident. One of the many important roles of car insurance is the money for medical costs of people who are injured in accidents that are your fault. Of course, that includes any injuries you may suffer as well.
6. Provide legal protection. There’s nothing to stop someone from suing you after an accident even if they are in the wrong. But car insurance gives you a buffer between legal claims and your wallet. That includes providing an attorney to handle any lawsuit stemming from a lawsuit over an automobile accident.
7. Protection from Mother Nature. What will you do if there’s a mudslide,  hurricane, or earthquake that damages or even totals your vehicle? That can be a time when money is extremely tight, but car insurance provides some protection in those circumstances.
8. Non-accident protection. Car insurance can also be crucial if your vehicle is stolen or vandalized. That’s one of the reasons why many insurance companies offer a break on insurance if a policyholder regularly parks his or her car off the street and in a covered garage, where the instances of theft and vandalism are much less prevalent.
9. Stop a slide to bankruptcy. For many people, the uninsured loss of a vehicle completely turns their lives upside-down. There’s no money for another vehicle, so getting to work on time can be difficult. That can lead to loans or credit card use that could spiral out of control.
10. Peace of mind. Because car insurance helps in so many areas, not having insurance can lead to some nerve-racking times just hoping against hope that no other bad news arrives. Studies actually show that contented workers are more productive on the job. That’s just one of the perks of peace of mind.

Information on SR-22's, DUI's and Crash Suspensions