Buying your first car is without a doubt an exciting thing. 

You get to drive your own private vehicle. You don’t have to take public transportation or rely on your parents or friends to drive you around. So you are free to go wherever you want more easily. 

However, the road can be a dangerous place too at times. If a driver is not careful (and, sometimes, even if they are) accidents can happen. And they might not only impact you and your car. They can affect other people and their cars as well. 

And, if that happens, things can get expensive very quickly. Which is why car insurance is always needed. But how does car insurance work exactly?

You’ll find a brief, to the point summary of this below.

How Does Car Insurance Work?

You may try really hard to be a careful and safe driver. But there is always a risk when driving a vehicle. And like I said earlier, accidents can occur on the road. 

And, if you do get in an accident, there could be damage to your car and other cars and/or property. Not only that, but there is the risk of serious injuries to yourself and others.

And all these things can get costly. And that is what car insurance is there for. 

With a car insurance policy, the insurance company can pay for any damages to your car, other cars, property as well as injuries to people.

What Does Car Insurance Cover?

Auto insurance policies provide coverage for things related to your car such as: 

  • Injury liability coverage
  • Property damage coverage
  • Collision coverage 
  • Comprehensive coverage
  • Medical expenses coverage
  • Uninsured or underinsured motorist coverage.

However, not all of these are found in every car insurance policy. Some of the coverages stated above are optional and are only found on certain types of policy. Meanwhile, some are mandatory depending on the state where you live. 

Types Car Insurance Coverages


This is the most common type of car insurance coverage. Liability insurance provides coverage for expenses that you are liable for. There are two subtypes of liability insurance and those are injury liability coverage and property damage coverage. 

Injury liability insurance provides coverage for medical expenses that you pay for the other party. Meanwhile, Property damage covers any other property of the other party that you may damage.


This provides coverage for your car repairs. Once you pay your deductible, collision will kick in to cover the costs. 


This provides coverage for damages that you are not liable for and are not caused by collisions. This includes natural disasters and theft. 

Personal Injury Protection

This provides coverage for you and your passengers’ medical expenses in case of an accident. 

Uninsured Or Underinsured Motorist 

This provides coverage for your medical and property damage in case of an accident caused by an uninsured driver.

What Are the Parts of an Auto Insurance Policy? 


Premiums are the rates that you pay for your car insurance policy. Payments are usually monthly or yearly.


Deductibles refers to the flat rate that you will need to pay before the insurance company covers any damages.

Premiums and deductibles are generally related. If you have a higher deductible, you’ll pay lower monthly premiums. With a lower deductible, you’ll pay higher monthly premiums.


This is the scope of what your insurance policy covers. It also is how much your policy covers for the different types of coverage (collision, liability, etc.).

If You Get In An Accident

If you get in a car accident, you will want to contact your insurance company and/or the other driver’s insurance company. The companies will assess the damage, who was at fault and determine how much they will cover. 

If you are not happy with what they are willing to pay/cover, it may make sense to hire an auto accident attorney to negotiate on your behalf.

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