Last updated: August 2022

Auto Insurance Coverage Explained

Let’s face it. Auto insurance can get confusing. Knowing how it works and why you need it will help you decide the coverage that's right for you, and could help you save money in the long term. Direct Auto Insurance wants you to know exactly what you're paying for, so here are the basics about auto insurance. It's auto insurance coverage explained simply!

What is auto insurance?

Auto insurance protects you against financial loss in the event of an automobile accident. It is a contract between you and your auto insurance company. You agree to pay the premium and the car insurance company agrees to pay your losses as defined in your policy. 

What coverage do I need?

Many states require that you keep a minimum amount of auto insurance coverage for bodily injury and property damage liability. Some states also require you to keep personal injury protection (PIP) coverage, which is also known as no-fault insurance. Your insurance company will always offer at least the minimum state requirements. Whether you just need the minimum required coverage or not is up to you. It can depend on many factors such as whether you have a car loan, health insurance, or young drivers in the household. Learn why you might need additional services with your car insurance.

How long does coverage last?

The length of a policy is referred to as the "policy term." Most policies have terms of either six months or one year, depending on the company you choose. As long as you pay your premiums, your policy should stay in force for the length of the policy term. 

What happens if you miss a payment? At Direct, we'll send you a notice and provide you additional time to make your payment. If you are still unable to make the payment, we are required to cancel your coverage. However, in some cases we can reinstate your coverage, even after your policy cancels. Insurance cancellation procedures are governed by state law.

What else do I need to know?

Here, you can find answers to frequently asked questions you may have regarding:

If you don't find the answers you need on our website, feel free to ask one of our knowledgeable agents by calling us at 1-877-GO-DIRECT (877-463-4732)

For additional details and disclaimers, please see our Terms of Use.

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