Although we often hear people complaining that they’re “insurance poor,” there are some types of insurance policies that are a necessity, such as auto insurance. Whether you’re about to get your first automobile insurance policy or are looking for a new policy, read this article and get the facts about automobile insurance.
Auto or vehicle insurance is simply an agreement between an insurance company where you pay a premium, and they provide you with insurance coverage in the case of an accident. The premium you pay for insurance is based on several factors, including age, sex, driving record, miles you drive, type of car, and credit report, among others. Vehicle insurance policies offer several types of coverage.
Who Is This Insurance For?
Due to state laws, automobile insurance is required for anyone who drives an automobile, truck, van, etc., on the main road. While at one time it was an option, vehicle insurance is currently mandatory in all the states, although the limits and amounts vary by state.
How Does it Work?
When you take out an automobile insurance policy, you pay premiums monthly, bi-monthly, quarterly, or annually. In exchange for the premiums, you’re covered for certain limits of insurance. You’ll typically have a deductible, which is the amount you have to pay before the insurance company pays. For instance, if you have a $250 deductible and have repairs costing $2,000, the insurance company will pay the $1,750 after paying the $250.
Different Types of Coverage
Automobile insurance policies offer the following types of coverage.
Collision – This provides coverage if your car hits another car or piece of property. It pays to have your car repaired.
Comprehensive – This provides coverage against hazards that are not other cars, such as deer, birds, storm or hail damage, etc.
Bodily injury liability – This pays for lost wages or medical bills to passengers involved in an accident where you’re at fault.
Property damage liability – This pays for damages to anything you hit with your cars, such as another car or a building.
Uninsured and underinsured motorists – This pays for damages to your or passengers caused by another driver who has no insurance or is underinsured.
Besides being a law, auto/vehicle insurance provides many benefits, including paying for repairs to your car, help with medical bills, and protection against lawsuits when you’re involved in an at-fault auto accident.