Auto Accidents & Car Insurance
An auto accident can happen in the blink of an eye, and yet the consequences can last a lifetime. That’s why having a comprehensive car insurance policy is critical, because it protects you, your family and passengers, and other drivers on the road.
Finding the best auto insurance policy and rates to suit your needs starts with understanding how auto accident insurance works—and we’ve got you covered there. Below, we cover everything you need to know about car accident coverage, from what it covers and doesn’t cover, to the legal ramifications and costs. Let’s jump right in!
Why Do You Need Auto Accident Insurance?
Car insurance is a contract between you and the insurance company that protects you financially from the consequences of an unexpected accident. In exchange for paying your premium, the insurer will cover the losses of your particular policy.
Auto insurance doesn’t only protect you and your car in the event that you get into an accident. It also offers financial protection if you cause a car accident that results in injury or vehicle damage to another person. It gives the peace of mind that you’re covered from financial liability, medical expenses, and also from legal consequences, no matter who is at fault.
Being insured is important because if you get into an accident without insurance, you could be
on the hook for the total financial cost of any damage you cause—potentially hundreds of thousands of dollars in damages and injuries. You may also find yourself in legal trouble for not having insurance coverage, since it’s required by law in all but two states.
What Does Car Accident Insurance Cover?
Every car insurance policy consists of several different categories of coverage, and each one provides a critical aspect of protection. Although each type is important, the law doesn’t always require drivers to have full coverage. That’s because depending on where you live, the rules about car insurance differ.
In many states ,you’re only required to have personal liability and property damage coverage (PLPD). This type of policy kicks in if you’re ever at fault for an accident, whether it’s with another vehicle or an inanimate object, such as a lamp post or building. In the first case, the personal liability portion of the insurance covers injuries that you cause to other people. The property damage portion covers damage to personal or public property caused by your vehicle. However, PLPD insurance doesn’t cover damage to your own vehicle. In that case, you’d need collision coverage.
Other states require types of medical coverage, such as personal injury protection (PIP), which pays for expenses such as medical bills and lost wages after a car accident, no matter who is at fault.
Even though some car insurance is optional, it’s still important to have more coverage than the basic requirements required by law. Otherwise, you might not have enough to pay for serious injury or damage. Typically, the basic components of a full coverage auto insurance policy will include the following:
- Body injury liability (BI): pays for medical expenses if you were at fault for an accident that caused injuries to someone else.
- Property damage liability (PD): the other part of liability coverage, this covers any property damage resulting from an accident that you caused.
- Personal injury protection (PIP): also known as no-fault insurance, PIP pays for expenses such as medical bills and lost wages for you or your passengers after a car accident, no matter who is at fault.
- Uninsured/underinsured motorist: offsets the costs if you’re involved in a collision caused by a driver who is either uninsured or lacks enough insurance to pay your expenses.
- Comprehensive: pays for damage to your car caused by something other than a collision, including: fire, vandalism, or falling objects (such as a tree or hail).
- Collision: Relieves expenses for damage to your car after an accident, no matter who was at fault.
The amount of insurance you need varies by state, and some states impose different rules for in-state versus out-of-state accidents. When you’re shopping for a policy, an insurance agent will be able to help you get sufficient coverage for the state where you live.
What Does Car Insurance Not Cover in an Accident?
Auto accident insurance is for unexpected occurrences, keeping you protected when you need it most. However, there are a number of circumstances where car insurance does not apply. That’s why it’s important to check the terms before you purchase a policy, in order to ensure your needs will be met. Here are some of the instances in which accident auto insurance does not apply:
Natural disasters: Most policies will not cover instances such as a hurricane, earthquake, tornado, flood, or collision with an animal.
Other people driving the insured car: If an accident occurs while a family member or friend is driving your car, you may not have full insurance protection. Some policies will only cover an accident if the other driver is listed on your policy, while others will only cover it if you were present in the car.
Personal belongings inside the vehicle: While your auto insurance may cover your car if it’s stolen or damaged, it will not cover personal items left inside the car such as a laptop, stereo, or other valuables.
Uninsured motorists: Some policies may not cover uninsured motorists. If you’re hit by a driver who doesn’t have insurance, you may be required to pay for all of your own medical bills, as well as the damage to your car.
Commercial use: If you drive your car for business purposes, you won’t be covered under your regular insurance policy. Instead, you’ll need to purchase commercial auto coverage, or a rideshare insurance policy if you drive for Uber or Lyft.
Driving a different car: Auto insurance is specific to the vehicle, not the driver. If you get into an accident while driving a car that isn’t listed on your policy, you won’t be covered.
Is Auto Accident Insurance Legally Required?
Each state has its own car insurance laws, as well as penalties for drivers who are caught behind the wheel without it. Virginia and New Hampshire are the only two states that do not require auto insurance. As a result, if you live in any other state and are caught driving while uninsured, you’ll be penalized for breaking the law. Plus, in some states you don’t even have to be in an accident or get pulled over to get caught driving while uninsured. That’s because many states actively monitor registered vehicles in the state to ensure they’re insured—and they issue fines or suspend licenses for the ones that aren’t.
The potential consequences of driving without insurance include:
- You may receive a ticket and/or fine, which could cost hundreds or even thousands of dollars
- Your license may be suspended
- Your car may be impounded
How Much Does Auto Accident Insurance Cost?
The amount you can expect to pay for car insurance coverage will depend on a few factors. The variables that influence your monthly premium include:
- Your age
- Where you live
- The numbers
- The level of coverage you need
- Your credit history
- Your driving history
Taking all of the above into consideration, the average American driver pays an average of $199 per month (per vehicle), which adds up to about $2,388 annually for each vehicle insured.
However, because the cost of auto insurance takes so many factors into account, that average policy price may differ from what you will owe. The best way to get a realistic estimate is by getting multiple free car insurance quotes that’s personalized for your specific needs.
See How Much You Can Save on Auto Accident Insurance
Car accident coverage is important for adhering to the law in your state, but it also protects your health and financial stability—which gives you the ultimate peace of mind. Best of all, choosing a policy doesn’t have to be expensive or stressful. We make shopping for insurance a piece of cake, with fast free online car insurance quotes to help you plan and save. Get your quote today to get the protection you need.
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Michael Giusti is a senior insurance analyst, business journalist, and university professor with over 20 years of experience. He serves as department chair at Loyola University New Orleans and contributes to Insurance Thought Leadership, U.S. News, and other leading financial outlets.
