Types of Auto Insurance Coverage

• Several types of auto insurance coverages can be included under one policy. Some of the most common types are collision, bodily injury liability, property damage liability, comprehensive and uninsured/underinsured motorist coverage. All states except for New Hampshire require vehicles to be insured by certain amounts of liability insurance, which is coverage that pays for damages to property owned by third parties as well as their medical expenses if they suffer injuries.
  
  

Benefits

• There are several benefits to owning auto insurance plans. These policies cover the costs to fix damages to insured vehicles and properties owned by third parties. Treatment of injuries suffered by individuals in accidents are also paid for by the insurers. Policies can also cover funeral expenses, rehabilitation costs or replace lost wages. Auto insurance plans cover the legal costs of the policy owners if they are sued as well.
  
  

Considerations

• Individuals applying for auto insurance coverage must prove they don't pose high risks or insurers may not extend coverage or charge them higher premiums. These determinations are based on information such as age, gender and driving records. Some factors that affect premium amounts include the applicants' geographical locations, the car's make and model and policy coverage limits. Policy owners can lower their premiums by increasing their deductible amounts as well. Most auto policies are six months to a year in length, according to the Insurance Information Institute.
  
  

Warning

• A driver can lose auto coverage in two ways. Insurers can drop or cancel the auto plan if the policy owner doesn't pay premiums on time, loses driver privileges or submitted falsified information on the insurance application. The other way is for an insurance company to not renew the coverage. This can be the policy owner's decision to let the coverage expire or the insurer can decide to not sell this line of insurance. However, how the driver lost coverage can make a big difference when applying for future auto insurance companies. Typically an insurer isn't alarmed if a driver auto policy wasn't renewed but a red flag is raised if the auto coverage was canceled.