Auto insurance is a written agreement between a vehicle owner and an insurance company that allows the vehicle owner to significantly reduce costs incurred in the event of a theft or an accident. If your vehicle gets damaged or stolen, your insurer will recompensate you as stipulated in the insurance policy, based on the premiums paid.
Types of Auto Insurance Coverage
Following are a few different types of auto insurance coverage that may be included in your policy:
- Collision coverage- It covers all the incidents of collision you might have with your vehicle, whether it collides with another vehicle or an object, regardless of who is at fault.
- Comprehensive coverage- It covers situations where no collision is involved, for example, a fire outbreak or theft.
- Bodily injury liability coverage- It pays for lost wages, medical expenses, and even funeral expenses for those involved in accidents that you are responsible for.
Auto insurance not only takes care of property insurance, that is, the costs of repairing the damage done to your car, but also compensates those who are injured or have sustained damage to their property from the accident. It covers the medical bills for all who are involved in the accident, including your own medical expenses. Sometimes, depending on the insurance policy, it might even cover funeral expenses.
Auto Insurance FAQs
An insurance premium is the amount of money that your insurer requests either on a monthly or yearly basis, to keep your insurance policy active. A few factors that affect your auto insurance premium include your accident history, your annual mileage, vehicle usage, your driving habits, and so on. All these factors help predict the likelihood of your being involved in an accident. The higher the likelihood, the greater the amount of insurance premium you will be required to pay.
Every vehicle owner must have auto insurance to avoid incurring excessive costs when motor accidents occur. One could very easily lose all their life savings if they caused an accident that left many injured. Having your vehicle insured with the right auto insurance policy will keep you from going bankrupt in the event of an unfortunate accident.