Auto Insurance Policy FAQ's: How does an auto insurance policy work?

If you cause a car accident, you may be financially responsible for the losses of the other people involved. A claim or lawsuit may be made against you for the financial cost of the losses. These may include property damage, medical expenses, lost wages, and pain and suffering of any injured person. This amount may be substantial. If you do not have an auto insurance policy, your home, savings, future wages, and other assets may be taken to pay for the claim against you. Auto liability insurance works to protect you by paying for the damages and paying for an attorney to defend you against auto accident claims or lawsuits.

An auto insurance policy also covers damages to your car. This coverage will help pay for your losses whether or not you were at fault.

When you buy an auto insurance policy, you have financial protection when you are involved in an accident. You have the peace of mind that in an accident in which you are at fault, you have the ability to pay for their losses and will not become financially ruined.