Auto insurance covers individual vehicles and authorized drivers. States require drivers to purchase this insurance so that everyone involved in an accident will have essential protection. Therefore, everyone who owns and drives a car needs insurance.
How It Works
A customer purchases coverage for each specific automobile in their household. The company issuing the policy typically considers many factors in determining the rates charged to individual drivers.
For instance, some insurance companies offer price discounts to very careful drivers who have driven for several years without any accidents. In some states, laws require that insurers provide discounted rates to people who pass safe driving classes and rates can vary widely based on state laws, approved insurance formulas and individual factors, such as the policy deductible.
Different Types of Coverage
Almost all states require drivers to purchase a minimum level of automobile liability coverage. This type of policy pays specified benefits to other people who sustain losses in auto accidents with an insured driver. Typically, states also require some amount of personal injury protection coverage. This policy provision helps cover the medical expenses of the insured driver if an auto accident occurs.
State coverage laws vary. Other types of protection include policy provisions to reimburse drivers for damage sustained in a collision, and comprehensive coverage to cover specified non-accident related losses, such as flood or hail damage sustained by a covered vehicle.
Drivers often buy underinsured or uninsured motorist coverage to provide protection if the motorist becomes involved in an accident with another driver who does not possess sufficient liability insurance.
Auto insurance provides funds to cover losses such as medical bills and vehicle repairs after an accident. If a motorist sustains a total loss, a comprehensive policy reimburses the owner for the full value of the vehicle at the time, minus the stated deductible. This payment assists a driver deprived of a vehicle to make a downpayment on another auto. Since, for most of us, our cars represent a significant investment, a good auto insurance policy can provide great peace of mind for ourselves and our families.