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A Guide to Auto Insurance. 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. Things covered by auto insurance range from damage to the car and passengers in an accident to theft of the car. As a legal requirement, it is mandatory for car owners to have a basic insurance policy in most states. Depending on what you choose to be covered by the insurance, there are different auto insurance policies to choose from. Some of the different auto insurance policies available to car owners include third party or liability auto insurance and full or comprehensive auto insurance. The minimum level of insurance that car owners can get from auto insurance companies is the third party or liability auto insurance cover. It is the most basic auto insurance cover. When a third party insurance policy holder is involved in a car accident and it is proven that it was their fault, their auto insurance company will pay for damages to the other party in the accident. Third party insurance cover is usually set and agreed on beforehand. This means that the auto insurance company sets the maximum amount they can pay in an accident beforehand. It is prudent for the policy holder to know what the insurance covers and maximum limit for payout in an accident. A policy may be attractive because it charges low premiums, but it provides a minimal cover that is not practical. In most states, car owners will be required to have a minimum cover which is the third party insurance in most cases. Comprehensive auto insurance is another cover provided by auto insurance companies. As the name suggests, comprehensive insurance covers your car comprehensively. The repair of your car will be paid for by the insurance company if your car is in an accident. In an accident, it is the insurance company that decides how much money will be paid out. Just like in third party insurance cover, insurance companies also set limits for the amount that can be paid out, although the limits in comprehensive auto insurance are higher. Comprehensive insurance is usually optional in most states and it is up to the consumer to choose if they need 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. This cover is a minimum requirement in some states
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The minimum legal requirements should be met by whatever auto insurance cover you choose. Recreation vehicles have their different insurance.