We all know that auto insurance is the insurance that people buy for their cars, trucks, and other vehicles. Auto insurance is meant to protect the car in case of an accident, theft, or any other kind of loss. Auto insurance can cover the insured person, the insured vehicle, and other people who are hurt in an accident. Each of these things is covered in different ways by different policies.
Auto insurance has become just as important as life insurance. Because vehicles are becoming less safe, many big and small companies are trying their luck in this area.
There are many different kinds of car insurance. Policies are different based on the needs and want of the people who buy them. For example, some insurance policies cover bodily injury liability, property damage liability, medical payments, and collision and comprehensive coverage for damage to the insured vehicle.
In general, there are five parts to an auto insurance policy.
- Conditions: This part is all about legality, or what the insurer and the insured are required to do by law. It tells you how to pay your premiums, how to file a claim, and how to settle a dispute.
- Coverage Parts: This choice talks about the limits of coverage for things like liability, medical, collision, and comprehensive. This section mostly tells you what your insurance company promises to do in exchange for your payment, based on the coverage and limits you chose.
- Declarations: This part of the policy has private information about the people who drive in your home. This information includes their name and address, the make and model of the car, the vehicle identification number, the policy number, the length of coverage, etc. This part also lists the basic type of coverage you bought, as well as the limits and deductibles of your policy. It is very important to give accurate information in this area, or the insurance claim can easily be turned down.
- Exclusions: This part tells you what your policy doesn't cover because of its limits. From here, you can find out what will be covered when you file a claim, and you can also make changes to your policy.
Definitions: This section, also called "fine print," explains the terms and rights of both the policyholder and the insurance company.
In some countries, you have to buy car insurance before you can drive on public roads. The bare minimum in this area is third-party insurance, which protects other people from loss, damage, or accidents caused by a car. You might or might not be able to get insurance to cover loss or damage to your own car. While in some other countries, both the car and the driver have to be insured.
Car insurance plans usually have a flat rate per car or per year, no matter how much the car is used. There aren't enough statistics for the insurers to be able to compare costs to figure out how to set prices. Other well-known ways to tell them apart are reasonable estimates, systems based on the odometer, systems based on GPS, and systems based on the OBDII.
