How Auto Insurance Works

Almost all auto insurance policies sold in the United States consists of at least two different types of coverage: Bodily Injury, (BI) and Property Damage (PD).  In a state which follows the tort system, for example, if you injure someone else with your car and it is determined to be your fault, you are responsible for paying the other parties medical expenses.  You are also responsible for paying for any damage you may have caused to their property.

But insurance coverages will protect you and your property in certain situations.  For example, if you have a motor vehicle accident that is your fault (again, in a state that follows the tort system), and you injur yourself, your bodily injury coverage will not protect you.  For this circumstance there is another form of coverage called PIP, and that stands for Personal Injury Protection.  This coverage is usually mandatory in No Fault states (as opposed to states which follow the tort system) since another driver's BI may not cover you.