What is automobile insurance?
It is a contract between a policyholder and an insurer. The policyholder agrees to pay the premium and the insurer agrees to provide coverage to insured as defined in insurance policy.

What does automobile insurance cover?
An automobile insurance policy comprises several coverage. They are either mandatory or optional.
  1. Bodily Injury Liability
    This coverage pays for claims and lawsuits brought by people who are injured or die as a result of an accident caused by insured.
  2. Property Damage Liability
    This coverage pays for claims and lawsuits brought by people whose property is damaged as a result of an accident caused by insured.
  3. Medical Payments
    This coverage pays the insured for medical expenses arising from an automobile accident while the insured is in the insured vehicle or someone else's vehicle. It may also cover medical expenses if the insured is injured by a vehicle while walking or bicycling, regardless of who is at fault.
  4. Personal Injury Protection (PIP)
    This coverage pays for medical expenses, rehabilitation, lost wages, payments for child care, funeral expenses and other damages to the insured.
  5. Collision
    This coverage pays for the payment to repair the insured vehicle, or the cash value of the insured vehicle if it is not repairable when the insured vehicle is involved in an accident. It is subject to deduction if the insured is at fault.
  6. Comprehensive
    This coverage provides coverage for an insured vehicle that is lost due to theft or damaged by an incident other than a collision with another vehicle or object, such as vandalism, flood, fire, falling objects, earthquake, windstorm, hail, riot, or contact with animals.
  7. Uninsured Motorist Coverage
    This coverage pays property damage or bodily injury of the insured caused by a uninsured or hit-and-run motorist.
  8. Underinsured Motorist Coverage
    This coverage pays property damage or bodily injury of the insured caused by a motorist who is insured, but whose coverage is insufficient to cover the damage and/or injury.
  9. Loan/Lease Payoff Coverage
    It is also called Gap Insurance. This coverage pays for the difference between what the insurance company pays and the amount that the consumer owes the leasing or finance company when the insured vehicle is declared a total loss or is stolen and not recovered.
  10. Loss of Use Coverage
    This coverage pays for the cost of other transportation like renting a vehicle, hiring a taxi or using public transportation when the insured vehicle is being repaired.
  11. Car Towing Coverage
    This coverage pays for towing a vehicle, delivery of gasoline, change of a flat tire, etc.

Who does automobile insurance cover?
The insured, the insured vehicle and the third party are covered by different coverage in an insurance policy.
  1. The Insured
    • Medical Payments
    • Personal Injury Protection
    • Uninsured Motorist Coverage
    • Underinsured Motorist Coverage
  2. The Insured Vehicle
    • Collision
    • Comprehensive
    • Loan/Lease Payoff Coverage
    • Loss of Use Coverage
    • Car Towing Coverage
    • Uninsured Motorist Coverage
    • Underinsured Motorist Coverage
  3. The Third Party
    • Bodily Injury Liability
    • Property Damage Liability
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