If you drive, you should have auto insurance. In most cases, it is required by law, but that's not the only reason to get insurance. Auto insurance takes the financial stress off your shoulders in the event of an accident. If you would like to know more, keep reading.

The Law Regarding Auto Insurance

Your state determines the laws regarding auto insurance, but most states require you to have a minimum of bodily injury and property damage liability coverage. Some states require more coverage. Delaware, for example, also requires personal injury protection coverage.

A few states don't require auto insurance. In New Hampshire, for example, you don't need insurance, but if you opt to purchase insurance, you must meet the mandatory minimum. In Virginia, drivers can purchase bodily injury and property damage, or pay an uninsured motorist fee.

Standard Types of Auto Insurance

Bodily injury and property damage liability coverage (aka liability coverage) pays for the other driver's damages and injuries if you cause an accident. If the other driver caused the accident, their liability coverage pays for your injuries and damages. However, there are other types of auto insurance you may also need.

Medical payments coverage pays for your medical bills if you caused the accident. Comprehensive coverage protects your car from non-collision damages, such as damage from hail or fire. Collision coverage pays for the damages to your vehicle if you cause an accident. Many lenders require you to have collision coverage and comprehensive coverage.

Passenger Coverage

If there is a passenger in the car at the time of the accident, they are usually covered under everyone's insurance. They can file a claim with both insurance agencies. Once the insurance companies determine who caused the accident, the appropriate insurance carrier pays for the passengers' injuries. The downside is that the passenger must wait while the insurance carriers do their investigation before getting a settlement.

Alternatively, passengers can file insurance claims with their own auto insurance or health insurance. For the passenger's auto insurance to cover the injuries, they must have personal injury protection coverage or medical payments coverage. The benefit of this method is faster payments because you don't have to wait for anyone to prove fault.

Penalty for Driving Without Insurance

If you are caught driving without insurance in a state that requires insurance, you could face multiple penalties. Depending on the situation, you could pay a fine of up to $5,000 and have your license suspended. In rare cases, you may receive jail time and/or community service.

To legally drive again, you may be required to get SR-22 insurance. SR-22 insurance is just like standard insurance, but you or the insurance company must regularly send a form to prove you have auto insurance.

Auto insurance financially protects you if you cause an accident. Other types of policies may also cover your damages and injuries even if you caused the accident. If you would like to know more, contact an auto insurance provider in your area today.