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Auto Insurance
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In many states, to drive (get license plates) you must carry:
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Liability coverage to pay for losses you cause others, or:
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No-fault coverage to pay you and your passengers for medical and related
expenses caused by injuries from a car accident, regardless of fault, or
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Both coverages.
Even in states where coverage isn’t required, drivers must, by law, be able to
pay for losses they may cause others. Having insurance is the simplest way for
most people to comply. Coverage for vehicle damage usually is necessary to
finance a car.
Generally speaking, higher deductibles lower your premium, but increase the
amount you must pay out of your own pocket if a loss occurs. Ask yourself how
much you are willing to pay in order to save on premium.
The most common coverages are:
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Liability
When an insured is legally responsible, liability coverage pays for accidental
bodily injury and property damages to others. Bodily injury damages include
medical expenses, pain and suffering, lost wages, and other special damages.
Property damage includes damaged property and may include loss of use.
Liability coverage also pays defense and court costs. State laws usually
determine the minimum amounts, but higher amounts are available and
recommended.
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Personal Injury Protection
Required in some states. Pays medical expenses for covered persons, regardless
of fault, for treatment due to an auto accident. It may also pay for
rehabilitation, lost earnings, replacement of services (child care if a parent
is disabled, for example) and funeral expenses.
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Medical Payments
Available in most states. Pays medical and funeral expenses for covered
persons, regardless of fault, when those expenses are related to an auto
accident.
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Collision
Pays for damage to a covered vehicle caused by collision with another object or
by upset of the car. A deductible is required.
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Comprehensive
Pays for loss of or damage to a covered vehicle, except loss caused by
collision or upset. Examples include loss caused by fire, wind, hail, flood,
vandalism, theft or impact with an animal. A deductible may apply.
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Uninsured Motorist
Pays damages when a covered person is injured in an auto accident caused by a
driver who does not have liability insurance. In some states this coverage may
also pay for property damage.
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Underinsured Motorist
Pays damages when a covered person is injured in an auto accident caused by
another driver who has insufficient liability insurance. Application of this
coverage varies by state and depends upon policy provisions.
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Rental Reimbursement
Pays expenses incurred for renting a car when your auto is disabled due to an
auto accident. Daily allowances or limits vary by state or policy provisions.
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Emergency Road Service
Pays expenses incurred for having your auto towed as a result of a
breakdown. Towing limits vary by state or policy provisions.
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