Important Information about Auto Insurance
Auto insurance is an agreement between the owner of a motor vehicle and an insurance company. The insurance company agrees to provide certain financial benefits to both the driver and passengers in the event of an accident. The policyholder pays a monthly premium in exchange for the insurance company upholding its end of the agreement.
The premium is the money the policyholder pays in order to keep the policy active. The deductible is the amount of money that the policyholder must pay before the insurance company pays their share. The amount of the deductible varies from person to person, depending on their policy.
Most automobile insurance covers repairs, legal fees and medical care for those injured as the result of an auto accident. Auto insurance also usually covers cost if a vehicle is vandalized or stolen.
Most states require drivers to obtain a minimum amount of liability coverage. Liability coverage usually covers things such as bodily injury, medical bills, pain and suffering, lost income and funeral expenses. Legal and court costs may be covered for an accident in which the policyholder is at fault.
Property damage liability is for expenses such as repairing the other driver’s car, or any other property damage. Collision insurance pays for repairing or replacing the policyholder’s vehicle if damaged in an accident. Comprehensive insurance pays the cost of repairs from other incidents, such as falling objects or vandalism.
Underinsured or uninsured motorist coverage is a good idea as well. It helps when the other driver in an accident has no insurance or inadequate coverage.