Almost every state has laws stating that people have auto insurance, but the actual regulations regarding auto insurance vary from state to state - so the type of coverage that you require depends on the state in which you live in.

Even if there are no laws, it is highly recommended that you have some form of cover; otherwise you may end up paying out huge amounts of money in the event of an accident, or even losing your home, in a worst-case scenario.

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Helpful Auto Insurance Information

Auto insurance is not a single type of coverage, but rather a combination of many different types of coverage, depending on the requirements of the policy holder. Some are optional in Michigan, and some are required by law. The actual amounts of coverage required by law vary from state to state, with liability auto insurance the most common type required. Other types can be important, and all types of auto insurance can be extremely useful to have in the unfortunate event of an accident - such as comprehensive, collision and uninsured motorist coverage.

Liability Insurance
This type of coverage relates to property damage and bodily injury, and is required in almost every state, by law. Coverage often appears in a sectioned format, such as 25/50/15. This relates the amount (In thousands of dollars) that a policy holder is covered for. The 25 refers to the amount of cover allowed for a single person involved in the accident - $25,000, and the middle number relates to the total amount of coverage for bodily injuries for the accident, regardless of the number of people involved.

The final number indicates the amount of coverage available for damage to property - $15,000. This can include the other person's car, or static objects such as road signs. If a person causes an accident and does not have sufficient levels of coverage, they may have to pay outstanding costs out of their own pocket. With medical and car costs on the rise, the recommended state minimums are often too little, and policy holders take out higher levels of coverage.

Uninsured/Underinsured Motorist Coverage
This type of coverage protects a policy holder from road users that have too low insurance coverage or no insurance at all. An example is if a driver with a car worth $50,000 is hit by a motorist with an insurance policy that only covers up to $25,000 of property damage, the underinsured motorist coverage will cover the additional $25,000

Collision Coverage and Comprehensive Coverage
These two types of coverage are usually optional extras. If a driver has a car which has outstanding finance on it, the finance company will often require the driver to have suitable levels of these types of cover. Comprehensive coverage covers events that are not usually covered by collision coverage - such as fire, theft, vandalism etc, and will pay the costs involved after an incident such as these.

Car Insurance Q & A

Question: If someone borrows my car and crashes it, does my insurance apply, or does theirs?
Answer: Generally speaking, the liability follows the car, so your insurance would apply, as it is your car. The liability insurance of the driver often pays the additional amount if the costs payable are above your policy limits.

Question: If a child goes to college with mom or dad’s car, are they covered under the parents’ personal auto policy?
Answer: This can vary from company to company. Check with the insurance provider and make sure that the child is listed as an additional driver. Do this before the child goes to college, and it will avoid unnecessary disputes later on.

Question: Do I need ‘gap’ insurance?
Answer: If your vehicle is on finance, and its value is now less than the amount you owe, then yes you need gap insurance. If you owe less than its value, then no, you do not need gap insurance.