Auto Insurance

Q1. What is auto insurance?
Auto insurance is a contract between a vehicle owner and an insurance company that provides financial protection for physical damage, bodily injury, and liability resulting from car accidents or other incidents involving a vehicle. In exchange for a premium, the insurer agrees to cover specified losses as outlined in the policy.

Q2. What are the main types of coverage in an auto insurance policy?
Most policies include:

• Liability Coverage: Pays for injuries or property damage you cause to others in a covered accident. This includes:
   
  • Bodily injury liability – medical bills, lost wages, and damages related to another person’s injury or death.
     
  • Property damage liability – repairs to someone else’s car or property.
     
• Collision Coverage: Covers damage to your own vehicle from a collision with another vehicle or object, regardless of fault.
   
• Comprehensive Coverage: Protects against non-collision incidents like theft, vandalism, natural disasters, falling objects, and animal-related accidents.
   
• Personal Injury Protection (PIP) or Medical Payments Coverage: Pays for medical expenses (and in some cases lost wages) for you and your passengers, regardless of fault.
   
• Uninsured/Underinsured Motorist Coverage: Protects you if you’re in an accident caused by someone without insurance or with insufficient coverage.
   

Q3. Is auto insurance mandatory?
Yes, in most states, including New Jersey, auto insurance is legally required. Each state sets its own minimum coverage requirements, typically for liability coverage. Drivers can choose additional coverages for greater protection.

Q4. What factors affect auto insurance premiums?
Premiums are based on:

• Driver’s age, driving history, and credit score (in some states)
   
• Location (urban areas often have higher rates)
   
• Type, age, and value of the vehicle
   
• Coverage limits and deductibles chosen
   

Q5. Why is auto insurance important?
It ensures that you’re financially protected in case of an accident, helps cover medical bills and property damage, and protects against lawsuits and claims, all while complying with state legal requirements.

Q6. Can auto insurance be customized?
Yes. In addition to state-required minimum coverage, drivers can add collision, comprehensive, rental reimbursement, roadside assistance, gap insurance, and higher liability limits to suit their needs and budget.