From the moment people are old enough to drive, they purchase auto insurance to comply with state driving laws. However, some people may not understand insurance or what they’re buying. These tips could help you to learn about the benefits, coverage options and how insurance works.
The purpose of automobile insurance is to cover your financial responsibilities associated with driving a car. Insurance first came about in the 1930’s when it was determined that people needed to carry liability coverage to cover the costs associated with injuries and deaths attributed to driving.
Besides covering liability issues, people can also purchase insurance for theft, fire and property damage.
All 50 states require some form of liability coverage to drive legally. Therefore, everyone is required to carry insurance. Each state may have different coverage requirements and financial limits.
Insurance coverage provides you with peace of mind knowing that many of your financial obligations will be covered by the insurance company if you should have an accident or destroy property.
Insurance policies are purchased from insurance companies. You may pay a monthly premium amount or pay quarterly or yearly bill. Paying for insurance transfers the risks you incur when driving over to the insurance company.
You can choose from a variety of coverage options and select the dollar limits that meet your needs. You’re responsible for paying the premium and deductible before the insurance company picks up the remaining costs of a claim.
Insurance Coverage Highlights
- Liability coverage helps to protect your personal assets by covering the costs of an accident involving another vehicle and driver.
- Collision coverage pays for damages to your vehicle when it’s involved in a collision with another object or car.
- Comprehensive coverage may be required by banks if you’re carrying a loan. It covers theft or damage from wildlife, fire, hail or floods.
- Property damage coverage pays the costs associated with damage that you cause to another person’s physical property such as their car, building, home or garage.
- Other types of optional insurance include underinsured, uninsured, medical payments, roadside assistance and rental car coverage.
Buying and maintaining auto insurance is the responsible way to protect your assets. Therefore, it’s a good idea to check your coverage yearly and make changes as needed.