Auto Insurance
Auto insurance, also referred to as vehicle insurance, car insurance, motor insurance, or automotive insurance, is a form of insurance that issued to cover any type of motor vehicle, ranging from cars, to trucks, to SUVs, and vans. Although the main purpose of car insurance is to help provide the insured with coverage in case of a traffic accident, other types of losses can be covered by motor insurance as well.
Keeping it Legal
In the United States, each state makes it mandatory to carry a certain amount of auto insurance coverage. Failure to do so can lead to substantial fines or even driving suspension or jail fines. Therefore, it is important that all drivers be properly insured before hitting the road.
Determining Premium Amounts
The premium is the money you pay each month toward your auto insurance in order to keep in current. A number of factors go into determining the amount of your premium. These factors include:
- Gender
- Age
- Driving Distance
Since men tend to drive more than women, they also have a higher accident rate. Nonetheless, the gender inequity usually only affects young males while adult men and women generally have fairly equal premium rates.
A person’s age can play a big role in determining auto insurance premiums. Teenagers without a driving record will generally pay more than their older counterparts. Some auto insurance companies will provide discounts, however, to teen drivers with good academic records. By the time a driver reaches 25, the premiums generally start decreasing. Similarly, seniors often enjoy a discount because they tend to drive far less once retired.
For some insurance companies, the distance a person drives can have a major impact on rates. Some will determine these distances based on reasonable estimations while others will actually take odometer readings in order to get a truer picture of how much a person drives.
Types of Auto Insurance Coverage
Auto insurance coverage is divided into several different categories, each of which covers different aspects of automobile loss. These categories include:
- Liability
- Collision
- Comprehensive
- Uninsured/Underinsured Coverage
- Loss of Use
- Loan/Lease Payoff
- Car Towing
The concepts behind uninsured/underinsured coverage, loss of use coverage, loan/lease payoff coverage, and car towing coverage are relatively self-explanatory. Liability, collision, and comprehension, however, can be a bit more difficult to understand.
Liability coverage covers any losses that the insured person may be responsible for, whether through an accident or through negligence. This coverage does not cover the losses the insured person may have incurred. Rather, it covers any expenses that someone else may have experienced because of the insured person’s actions.
Collision, on the other hand, covers the cost of repairing or replacing the insured person’s vehicle if he or she is involved in an accident. The insured person will, however, be responsible for paying the deductible. The amount of this deductible is determined by the auto insurance policy.
Comprehensive covers the expense of replacing or repairing a car in the case of causes not covered by collision. Types of incidences covered by collision include weather, theft, attempted theft, fire, vandalism, and animal impacts.
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