Car insurance is simply an insurance that car owners buy for automobiles to protect against losses incurred during traffic accidents.

In reality, auto insurance policies consist of different extends of coverages where insurance may cover a third party, insured car, and the insured owner. Each of these entities is covered differently hence the policies will determine the situation to be covered.

Here are the specific coverages that you might buy when thinking of getting a car insurance.

Collision Coverage – if you’re involved in an accident, this coverage pays for the damages that your car may incur. It is normally the most expensive of all insurance policies. An insurance company will declare your car “written-off” or “totaled” if the cost of replacement would be cheaper compared to the cost of repair.

Underinsured Motorists Coverages – it pays if the hit-and-run accident has caused more damage than the liability insurance coverage for the driver can cater for.

Supplemental Coverages – auto replacement coverage covers your automobile regardless of whether it needs a repair or a full replacement, even if the cost is more than the depreciated value of the automobile. Rental reimbursement covers rented cars in case of theft or damage. Towing and labor coverage pays for towing in case you experience auto failure and your car would need towing. Note that the supplemental coverages may be part of the large policies or can be taken separately on their own.

Liability Insurance – It is mandatory in most states. The policy covers physical injury for you and a third party involved as well as damage to property expenses. The coverage also covers all legal bills for instance if a third party decides to sue you for “pain and suffering” incurred. Note that the minimum requirement will not cover you sufficiently in very extreme cases, reason why it’s highly recommended that you buy more than the state minimum required policy. The limits for liability coverage are normally conveyed using three numbers. For instance, liability limit of 20/50/10 show that there is a coverage for $20,000 for bodily injury per individual, a $50,000 coverage for bodily injury per accident and a $10,000 coverage for property damage per accident.

Comprehensive Coverage – A comprehensive coverage pays for all damages to your car that weren’t as a result of an accident such as vandalism, car-jackings, hitting an animal, and natural disasters to name but a few.

Uninsured Motorists Coverages – this coverage is mandatory in many states and covers injuries sustained if one is involved in a hit and run accident by an uninsured driver.

This article was last updated by Bruno Silva on September 24, 2009.

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