An auto insurance policy is an agreement between an insurance company (insurance provider) and a customer (policy holder). The policy holder will pay a fee, or a premium, and the insurance provider will cover the costs of any car-related accidents covered under the terms of the insurance policy. Here are some questions some might have regarding auto insurance.
Is Auto Insurance Really Necessary?
Yes. In fact, in some states, it is illegal not to have any coverage. Many state governments will also allow someone with proven finances to cover payment in case of an auto accident for which they are liable, but most people don't have that kind of money. Auto insurance is protection against sudden a financial hardship caused by a car accident. Even if it isn't required by law, it is still highly recommended, since a good insurance policy will pay the costs of a hospital stay, therapy, and even loss of income, when such is necessary.
Who Is Covered By Auto Insurance?
When the policy is being formed, it includes a list of drivers who will receive coverage for a specific vehicle. It usually includes the main policy holder, the policy holder's spouse, and any other family members of legal driving age in the household, but it can include others who will use the vehicle as well.
What Falls Under Auto Insurance Coverage?
Most states require a driver to have a certain minimal amount of liability insurance. Required liability insurance generally only applies to damages or injuries caused to others, but that is not enough for effective coverage. Different drivers have different needs and there is probably a good policy for each one of them. Following are a few other things insurance might cover:
? The car of the policy holder: It doesn't have to be a single car. Many policy holders have more than one car on the policy. The vehicle can be insured not only against liability but against collision, regardless of fault. There is coverage for vandalism, or such "acts of God" like extreme weather or falling objects.
? The policy holder or the policy holder's passengers: The people inside the car can be covered under the insurance policy as well, so their medical costs can be paid in case of an accident, up to the agreed-upon amount in the insurance policy.
? The policy holder, the passengers, and the car against uninsured or underinsured drivers: This merely covers the costs of being hit by a driver without adequate insurance.
What Causes Changes In The Auto Insurance Premium?
Policy rates are affected by a number of factors, including place of residence, the type of car under the policy, and any safety features the vehicle may have. Previous driving record is almost always a factor, as is age. Older drivers receive a reduced cost, as they tend to be more careful than younger drivers.