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How Car Insurance Works

“How does car insurance work?” We know this question is asked regularly. Knowing how car insurance works is important to make sure you’re protected every time you’re behind the wheel. To make sure you have the right insurance coverages for your car, start by finding an insurance company that you can trust. If you get into a car accident, your car insurance can help pay for injuries or property damage after you file a car insurance claim.

Car insurance protects you from paying for another driver’s injuries and repairs by yourself after you cause a collision. Some types of insurance also pay for damage to your own vehicle. To use your car insurance, you must file a claim. Once you make a claim, your company will evaluate the damage and pay a settlement up to your policy’s limits.

Most states and many lenders require you to carry auto insurance coverage. In order to keep your car insurance policy active, you’ll have to pay your monthly premiums on time. If your policy lapses, you’ll be unable to drive legally and pay more for coverage in the future.

Key takeaways

  • The different forms of car insurance protect you from paying for expensive medical bills and property damage yourself.
  • Liability car insurance covers the cost of other driver’s injuries and property damage after an accident you cause. 
  • Some types of car insurance can also pay to fix your car after it’s damaged in a collision or by a non-driving hazard, like a tree branch.
  • Car insurance doesn’t cover regular maintenance issues, wear and tear, or damage that’s more expensive to repair than the amount of insurance you have.

Driving a car provides freedom and convenience, but it’s also a huge responsibility. That’s why it’s the law to have an auto insurance policy if you’re a registered car owner. If a driver gets into an accident, auto insurance is a “rainy day” fund — it pays for car repairs, medical bills, legal fees and even rental fees for a replacement car for you and maybe other drivers involved in the collision. Without insurance, the driver risks the tremendous financial burden of paying for everything out of pocket.

At-Fault Accidents: Driver Liability for Car Accidents

If you’re in a car accident, you’ll probably start hearing the word “fault” a lot. The other driver might say you’re to blame (at fault) for the accident as soon as it happens. And your insurance adjuster will be talking about it too. Fault matters because when you are at fault for an accident, you (or, more likely, your insurance company) will be on the hook for the other driver’s expenses (“damages“). In this article, we’ll answer all of your questions about fault.



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