Auto insurance, also called driver's insurance or car insurance, is one of the most common types of insurance that people buy. Even though laws vary from state to state, almost all states now require drivers to have some kind of car insurance in order to legally drive on public roads. If you drive without insurance, you could be fined, have your licence taken away, or even go to jail for a short time if you do it more than once. Driver's insurance is required in almost every state, so it's a good idea to know the basics about it.
Coverage types and levels
The type of insurance coverage a person needs and how much they will pay for it depend on a number of factors, such as the age of the driver, his or her driving record, the age and value of the vehicle, the dollar amount of the coverage, and whether or not the vehicle is paid off in full. Auto insurance can get complicated, but everyone should know about these four types.
Liability coverage is the most basic type of coverage. It protects the driver from any claims that could be made after an accident or other incident that is the driver's fault. Usually, a driver needs at least this much coverage to be considered insured. Liability insurance usually has the lowest premiums, but it doesn't cover damage to the driver's own car. A lower monthly premium needs to be weighed against the risk of a large financial burden. Also, most loan companies require a driver to have full coverage on their car until the loan is paid off in full.
Collision insurance pays for some or all of the cost of fixing a driver's car after a crash, based on an estimate of how much the repairs will cost. Even though collision insurance can pay for itself in a car accident, the monthly premiums are higher than those for liability insurance. Most policies also have a deductible, which means that the person who bought the policy has to pay a certain amount before the insurance company will pay. There are many different kinds of deductibles, but in general, the higher the deductible, the lower the monthly payments, and the lower the deductible, the higher the monthly payments.
?
Comprehensive insurance is usually needed for vehicles that are still being paid off. Many people who own expensive or otherwise valuable cars also have full coverage on them. Comprehensive coverage pays for damage that isn't caused by a collision, like damage from fire, theft, vandalism, and so on. However, the exact things covered by each policy can vary quite a bit.
Uninsured Coverage protects you if a driver without insurance or with too little insurance hits you or your car. Most places have laws that say you have to have insurance, but that doesn't mean that everyone on the road has insurance. With this kind of coverage, you won't have to pay to fix your car if someone less responsible than you causes an accident.
There are different levels of coverage for each type of insurance. The higher the coverage (in dollars), the more the premium will cost. The driver's premiums will also go up if they get into an accident or get tickets for moving violations. Also, rates are higher for men than for women, for younger drivers, and for people who live in cities or other high-crime areas. Despite this, though, every responsible driver must have car insurance.
