Car insurance is mandatory in almost every state. State minimums and types of coverage vary, but nearly every state that requires insurance requires liability coverage for property damage and bodily injury. While it's important to meet the state's minimum auto insurance requirements, you don't have to stop there. In fact, the bare minimum won't be enough in most cases.
For example, no state requires comprehensive and collision coverage. However, these are two common add-ons that many drivers rely on to help with car thefts, animal collisions, and more. Although etymologically all living beings are considered animals, the impact on a human being is excluded from the definition of animal according to insurance definitions. However, unscrupulous merchants sometimes take advantage of unsuspecting people by offering them GAP insurance at an additional price, in addition to the monthly payment, not to mention state requirements.
The basic policy, which is the result of the Auto Insurance Cost Reduction Act, costs less but offers limited coverage (no bodily injury liability available). States that do not require the owner of the vehicle to have auto insurance include Virginia, where an uninsured motor vehicle fee can be paid to the state, New Hampshire and Mississippi, which offer vehicle owners the option of depositing cash bonds (see below). Traditionally, auto insurance companies have agreed to pay only the cost of a trailer related to an accident that is covered by the car insurance policy. Collision coverage covers damage to your car after an accident, no matter who caused it, and comprehensive coverage covers the type of damage that can happen to your car when you're not driving it.
In the United States, auto insurance that covers liability for injuries and property damage is mandatory in most states, but different states apply the insurance requirement differently. Other states may require additional medical coverage or what is known as personal injury protection (PIP), which covers health care bills that you or your passengers incur. In addition, some insurance companies include Acts of God as an aspect of comprehensive coverage, although this is an old term that isn't commonly used today. For example, fire, theft (or attempted theft), vandalism, weather damage, such as wind or hail, or impacts with non-human animals are types of comprehensive losses.
An example of property damage is when an insured driver (or an outsider) hits a telephone pole and damages it; liability coverage pays for damage to the pole. Any type of property that is not attached to the vehicle must be claimed under a home insurance or renters insurance policy. The insurance premium paid by a motor vehicle owner is typically determined by a variety of factors, such as the type of vehicle covered, marital status, credit rating, whether the driver rents or owns a home, the age and gender of the covered drivers, their driving history, and where the vehicle is primarily driven and stored. Personal items in a vehicle that are damaged due to an accident are generally not covered by the auto insurance policy.
An important thing to keep in mind if you financed or leased your car is that your creditor or landlord is likely to require that you include collision compensation in your car insurance policy. North Carolina did the same in 1957 and then, in the 1960s and 1970s, many other states passed similar mandatory insurance laws.
