Auto insurance covers car owners against accidents or theft of their cars. The level of cover that you get from an auto insurance company depends on what you choose. Auto insurance can cover damages to the car, passengers in case of an accident or even when the car is stolen. As a legal requirement, it is mandatory for car owners to have a basic insurance policy in most states. According to your choice of what you would like the insurance to cover, there are several auto insurance policies to choose from. Auto insurance policies available for car owners to choose from include third party or liability auto insurance and comprehensive or full auto insurance.
Third party or liability auto insurance is considered to be the lowest insurance cover that is offered by auto insurance companies. Third party is the most basic auto insurance cover. In case a third party insurance policy holder is involved an accident and it is proven that it was their fault, their auto insurance company pays damages to the other party. This policy sets insurance cover payout amount in advance The maximum amount that can be paid by the auto insurance company in case of an accident is set when signing up for the cover. The policyholder should confirm what the insurance covers and what the limits per accident will be. Some insurance companies charge you very low premiums but the cover they provide is small and at times unrealistic. In most states, car owners will be required to have a minimum cover which is the third party insurance in most cases.
Another auto insurance policy provided by insurance companies is the comprehensive auto insurance. As the name suggests, comprehensive insurance covers your car comprehensively. If your car is involved in an accident, the auto insurance company will pay for the car or its repair. The insurance company usually decides on the amount that will be paid out in case of an accident. Although the limits for amounts to be paid out in an accident are higher for comprehensive insurance, there are maximums just like in third party insurance. A comprehensive auto insurance is not mandatory in most states and some car owners choose not to have it.
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Medical and personal injury protection insurance is another type of auto insurance. The medical expenses of the passengers and the driver of the car are paid for by the insurance if you have this cover. In some countries or states, having this cover is a minimum requirement.
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The minimum legal requirements should be met by whatever auto insurance cover you choose. Recreation vehicles have their different insurance.