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Auto Insurance

What Is Automobile Insurance?

Automobile insurance, also called car insurance, is a financial contract between you, the policyholder, and an insurance company. By applying for coverage and agreeing to paying a regular premium that is determined by the company, the company agrees to protect you against financial loss in an accident or pay for any automobile claims that you file that are covered under the terms of your policy.

Who is Car Insurance For?

Anyone who is licensed to drive a vehicle that must be registered to be driven on public roads has a need for car insurance, even if they do not personally own a vehicle. If you do own a vehicle, you will need a policy that will pay for liability claims and physical damage if necessary. If you rent a vehicle or regularly borrow a vehicle that you do not own, you have the option to purchase a special non-owner’s policy, where you will have liability protection when you are behind the wheel of vehicles that you do not own.

How It Works?

When you buy auto insurance, you can purchase a basic policy that offers strictly what the state requires you to carry by law, or you can purchase a fully comprehensive policy with added coverage and higher limits. Once the policy is issued, you will have the coverage that is specifically listed on your declarations page through the period listed. Your policy will renew each term, and depending on your record and other details, the rates may change. If you need to file a claim, you will contact your company directly and the claims adjuster will handle communications with the other party’s insurer to make the situation as stress-free as possible.

Different Types of Coverage

Coverage that is required and available can vary by state. Here are some of the most common types of coverage you will be able to purchase:

1. Bodily Injury Liability: To pay for injury to others
2. Property Damage Liability: To pay for damage to the property of others
3. Uninsured Motorist: To pay for injury to you and your passengers
4. Medical Payments/Personal Injury Protection: To pay for your medical bills regardless of fault
5. Comprehensive/ Collision: To pay for damages to your vehicle
6. Rental Car: Daily rate for a replacement vehicle

The Benefits of Car Insurance

Just because car insurance is a required product does not mean that it does not offer benefits. Not only will you get peace of mind when you buy a policy, you will also be able to pass on the burden of paying for losses out-of-pocket when you have adequate coverage.