Insurance Coverage for Auto Accidents

An automobile accident can be a traumatic event. Among the many issues an accident raises is paying for the resulting medical costs and property damage. The driver at fault may be liable for the other driver's costs as well as his own.

Because of the expensive potential of such liability, automobile insurance is the practical financial safeguard that vehicle owners should have in the event of an accident.

Insurance regulations vary from state to state. Some states, including Mississippi, require a driver have "proof of financial responsibility," or evidence of the ability to pay any damages he or she causes in an accident. While most people purchase insurance to meet this obligation, one can post $15,000 in cash or securities with the state instead.

States also set minimum levels of liability insurance coverage. Mississippi's minimum levels are personal injury costs of $10,000 per person and $20,000 per accident and property damage of $5,000 per accident.

Liability insurance does not cover your medical costs or damage to your vehicle. Collision insurance covers losses you incur in an accident. Comprehensive coverage pays for auto damage caused by theft, fire, or vandalism. If you borrow money to purchase your automobile, the lender may require the purchase of collision and/or comprehensive insurance.

Rates and terms for insurance policies vary from company to company, so it pays to shop around.
Insurance companies set their rates based on certain criteria, including age, sex, marital status, driving record, geographic location, the car's model year, and its primary use. For example, insurance rates for male drivers under the age of 21 are much higher than those for an adult because research has shown that these young drivers are more likely to have accidents.

One way to lower the premium is by agreeing to pay a higher deductible, or the amount per accident you agree to pay yourself.

Some drivers gamble by not purchasing insurance, risking seizure of their assets or wages to pay for damages. A motorist involved in an accident caused by an uninsured driver can have the additional aggravation of no insurance settlement to cover damage to the auto. For this reason, motorists can also purchase uninsured/underinsured motorists protection insurance.

As with all insurance, automobile coverage is a policy you hope never to have to access. However, investing in automobile insurance provides financial protection in case the unfortunate happens.