Things to Know About Auto Insurance:
Auto insurance is a contract that the owner of a motor vehicle enters into with an insurance company to protect both the driver and passengers in the event of an accident or other event in which physical injuries occur to people or property damage occurs to both vehicles. The insurance policy holder pays a premium, the agreed upon rate, to the insurance company in exchange for the company agreeing to pay for any damages as outlined specifically in the insurance policy.
While the premium is the amount of money that you pay on a monthly, bi-annual or annual basis in order to be covered for damages in the event of an accident, the deductible is the amount of money that you as the vehicle owner must pay out first before the insurance company begins to pay their share as specified in your insurance policy. A $500 deductible on a policy means that you must pay the first $500 in damages or expenses before the insurance company pays for the remainder of the damages, up to a certain limit as determined by your policy. The terms of an automobile insurance policy generally covers the cost of repairs, legal fees, and medical help for anyone injured as the result of an auto accident, in addition to covering costs if your vehicle is vandalized or stolen.
All but one of the United States requires drivers to obtain at least a minimum amount of auto insurance in the form of liability coverage. Different types of insurance coverage include bodily injury liability, to cover the cost of medical bills, pain and suffering, lost income and funeral expenses, in addition to legal and court costs, for any accident for which you are at fault. Property damage liability coverage includes covering such expenses as repairing the other driver’s car, or any other type of property you may damage with your vehicle. Collision insurance covers the cost of repairing or replacing your vehicle if damaged in an accident, and comprehensive insurance coverage pays for the cost of repairs caused by incidents other than an accident, such as falling objects or vandalism. It’s a good idea to also consider including underinsured or uninsured motorist coverage in the event the other party in an accident has no insurance coverage or inadequate coverage.