What do the Different Car Insurance Policies Do?

Every car insurance policy is different depending on where you live, what type of system you are insuring under, who your provider is and what coverage options and limits you choose. What this means for drivers across America is that it is important to familiarize yourself with the various auto insurance policy options before you select your car insurance. You could be insuring with the wrong provider under the wrong policy simply because you haven’t done your research.

In general, all car insurance policies, whether assessable coverage or basic coverage, do the same thing – offer protection and compensation for yourself and your vehicle in the event of an accident. If you are facing loss, medical expenses or repairs to your vehicle, then you will make a claim to your insurance provider. They will analyze the situation and compensate you for your damages according to the specifics of the accident and the specifics of your insurance. The main differences in car insurance policies lie in the type of system you are insuring under and the various coverage options you include on your policy.

No Fault and Tort Car Insurance Policies

There are two main differences when it comes to insuring your car – whether your state operates under a no fault system or a tort system. There are only nine states that operate under a no fault system, three states that allow their drivers to choose which system to insure under and thirty eight states that use the tort system. A no fault system means that your insurance provider is responsible for compensation regardless of who is found liable for the accident. Whether or not you cause the accident, you will make the claim through your own provider.

Under a tort system, only the insurance provider of the driver who is liable for the accident will be responsible for compensation. If you cause the accident, then your insurance provider will handle the costs to yourself (depending on your coverage) and to the other driver. If the other driver is liable for the accident, then his insurance provider will provide you with compensation.

Different Auto Insurance Coverage Options

In addition to the difference in systems, car insurance policies will all offer various forms of compensation for various types of damage. Most car insurance policies include bodily injury liability as well as property damage liability (for tort systems). This pays for the other driver’s costs if you are liable for the accident. No fault car insurance policies usually include personal injury protection for medical costs as well as property damage protection for vehicle costs.

Most drivers, regardless of what state they live in and what system they insure under, will also include optional coverage extras. Collision coverage pays for on road damage to your car (under a tort system) if you are found liable. Comprehensive coverage pays for off road damage to your car (such as theft and storm damage). Uninsured motorist coverage offers compensation in the event that the other driver is not adequately covered.

Your car insurance policy will pay for specific damage to your vehicle depending on what amount type of auto coverage you have chosen to buy. Your limits will also make a difference when it comes to your car insurance policy. When choosing a car insurance policy, you want to be sure that you are choosing adequate coverage to protect you fully on and off the roads, regardless of whether you are driving in a no fault state or a tort system state. Car insurance is meant to protect you financially but it is up to you to pick a policy with high enough limits to ensure this happens.

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