Insurance, by definition, is a contract between you and the insurance company. The contract stipulates that as long as you pay the premium, the insurance company agrees to pay for your covered losses if you experience an accident, theft or vandalism, or your car is damaged by certain causes. The amount you receive in compensation is based on several factors.
If you are deemed at fault in a car accident, liability coverage will pay for repairs, medical costs for injuries suffered by others in the vehicle, plus other expenses related to the accident such as legal fees. Your liability limits are set at the time you purchase your policy. There are two parts to liability coverage: Bodily injury liability and property damage liability.