What is Automobile Insurance?

Auto or automobile insurance is a transaction between you and the insurance company where they offer insurance coverage in exchange for a premium. Your premium is determined by your driving record, age, miles you travel each day, type of car, credit scores, and gender, among a few others.

Who is Auto Insurance For?

Because of the laws mandating car insurance, it’s for anyone who drives a motorized vehicle. The amount or type of coverage you’ll have depends on if it’s being driven, who’s driving it, and the car’s value. The very basic insurance required by law is a liability. Any additional insurance is up to the individual purchasing the insurance.

How Does Auto Insurance Work?

The premium you pay provides you with certain types and limits of coverage. Auto policies also have a deductible, which is the dollar amount you have to pay during a claim before the insurance will pay. If you have an auto policy with a $500 deductible and require $3,000 in damages, you will pay $500, and the insurance company pays the remaining $2,500.

Different Types of Coverages in Existence

Liability insurance, which is required in all the states, covers you and your family in the case of a lawsuit for bodily damage, property damage, or medical payments if the accident was your fault. Each policy has a limit of how much they’ll pay for each occurrence.

Other coverage types include collision, comprehensive, uninsured, and underinsured motorists. Collision covers your car when you hit into something while comprehensive covers damages when you weren’t driving such as deer kill or storm damage.

Uninsured and underinsured motorists cover damages to your vehicle if the other driver has no insurance or has an insufficient amount.

Major Benefits

Having automobile insurance can be very beneficial to you and your family in ways that go beyond following the law. It provides money to repair your car, pays medical bills, or even provides income while you’re off work due to an accident. Automobile insurance is a win-win.