Auto or car insurance coverage has two parts. The first – and most important – is the liability section of the policy, which covers your legal responsibility for injuries or damage to other people and their property. Most states require at least a minimum amount of liability insurance.
The second part of auto insurance covers the car itself. Comprehensive coverage (sometimes call OTC or Other Than Collision) pays for losses from fire, theft, vandalism, animal and similar perils. Collision coverage pays to repair damage caused by an accident. If your car is leased or financed, the lender requires you to purchase comprehensive and collision coverage. There are also ancillary medical payments, car rental, uninsured/underinsured motorists coverage, which vary by state.
Choosing high deductible for your physical damage coverage can help reduce premiums. If you also carry umbrella or excess liability insurance, be sure that you carry the required amount of basic liability insurance to avoid a gap in coverage if you cause a serious accident.
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