What is car insurance?
Car insurance is a form of insurance that specifically covers automobiles, trucks, motorcycles, and any other type of motor vehicle that travels on a roadway. Auto insurance provides financial protection in the event of damage to a vehicle or any people driving or riding in a vehicle consequential from an accident. In the event of a traffic accident or collision, car insurance policies pay for the damage when there is a valid claim filed.
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Car Insurance Requirements
Most countries require mandatory car insurance policies to cover a vehicle before it is allowed to be driven on a roadway. Regulations for car insurance vary by jurisdiction, with some areas requiring both the driver and the automobile to be covered.
In the United States, liability car insurance is required in each state unless financial responsibility can be proven otherwise. Each state has varied requirements for liability insurance and when a person drives in more than one state, they automatically assume that state’s requirements for liability coverage. Each state posts their minimum requirements for car insurance at the website of their state commissioner.
Keep in mind that although car insurance must be maintained for legal reasons, in the event of an accident the driver at fault can be personally sued for any amount of damage that exceeds the limit of the insurance coverage. For example, if the state’s minimum car insurance requirements are 50/100/25, this means that each person injured in the accident would receive up to $50,000 (first number), with a limit of $100,000 per accident (second number). $25,000 (third number) is the maximum amount of property damage coverage allowed. This means that if there were more than two people injured in the accident or if the personal injury claim exceeded the maximum payout, the driver at fault is personally responsible for the remainder of money.
Differences in Policies
Car insurance policies are paid for either yearly, quarterly, or monthly, with most car insurance companies offering a discount if paid in full once a year. Insurance payments are called insurance premiums and the amount is determined by not only the coverage amount of the policy, but also by unique factors such as the type of car, how old the driver is, where the car is located, and the driving history of each driver.
In many jurisdictions it is required that each person of driving age living at the same address must be included on an auto policy. In certain circumstances liability auto insurance does not cover the policyholder when they drive a car other than their own primary covered vehicle. Typically, the insurance policy on the actual car will cover all drivers unless they are specifically excluded from the policy.
Full coverage auto insurance is a type of insurance that is more comprehensive than liability insurance alone. Many times a finance company will require a vehicle to be covered with full coverage insurance if there is a loan on the vehicle. In the event of an accident where the vehicle is a total loss, full coverage auto insurance will pay off the balance of the car loan.
Choosing the Right Plan
Car insurance is a reality when it comes to owning and operating a vehicle. By following the many different car insurance reviews, drivers can be sure to receive the best plan for their lifestyle, at the best rate. Simply enter your ZIP code into the FREE auto insurance comparison tool below to receive a list of plans now!