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Auto Insurance

Who Needs This Insurance

This insurance covers individual vehicles and authorized drivers. States require drivers to purchase this insurance so that everyone will obtain protection if an accident occurs.

How It Works

A customer purchases coverage for each specific automobile in a 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 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, for instance. The rates vary widely sometimes 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 require some amount of personal injury protection coverage also. 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.

In some states, drivers purchase underinsured or uninsured motorist coverage to provide more benefits if they should be involved in an accident with another driver who does not possess sufficient liability insurance to reimburse a loss.

Major Benefits

Auto insurance provides essential funds to cover financial losses such as medical bills and vehicle repairs after auto accidents. 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. Not only is auto insurance policy mandated by law, but a good policy can safeguard against huge financial losses.