If you own a vehicle, having auto insurance is likely required by law where you live. But what exactly is auto insurance, and why is it so important? In this blog post, we will explain the basics of auto insurance in simple terms.
What is Auto Insurance?
Auto insurance is a contract between you and an insurance company. You pay a monthly or annual premium, and in exchange, the insurer agrees to cover expenses if your vehicle is involved in an accident, vandalized, stolen, or damaged by an incident like a natural disaster.
Without auto insurance, you would be personally responsible for paying 100% of the costs from a collision or other incident - repairs for your own vehicle, medical bills if anyone is injured, and repairs for any other driver's damaged vehicle or property. These expenses can easily run into the tens of thousands of dollars or more.
The Two Main Types of Auto Insurance
There are two main categories of auto insurance coverage:
1: Liability Insurance: This type of auto insurance covers injury and damage costs if you are found legally liable for an accident. Most places legally require at least basic liability insurance. It includes:
- Bodily injury liability: Covers injuries to the other driver and their passengers
- Property damage liability: Covers damage to the other driver's vehicle and property
2: Additional Coverage Options: While not legally required, many drivers opt for additional auto insurance coverage like:
- Collision: Covers repairs to your own vehicle after an accident
- Comprehensive: Covers damage from incidents besides collisions, like theft, vandalism, weather, etc.
- Uninsured/underinsured motorist: Covers your costs if you're hit by a driver without insurance or with insufficient insurance
- And other optional add-ons like roadside assistance, rental reimbursement, etc.
Why is Auto Insurance Mandatory?
The reason auto insurance is legally required comes down to protecting public safety and ensuring there is a way to pay for accident costs. If those at-fault in collisions don't have auto insurance, the resulting injuries and damage get paid for in less reliable ways - either through legal headaches and lawsuits, or through taxpayer-funded resources if those at-fault can't pay out of pocket.
With auto insurance, including the liability coverage requirements, there are established funds available through insurance companies to cover expenses after collisions in an orderly, regulated fashion.
Finding Affordable Auto Insurance
The number one factor that determines your auto insurance premium is the amount of coverage you need to fully protect yourself and others on the road. The more coverage included in your policy, the higher the premium.
Other key factors that affect auto insurance pricing:
- Your age, driving record, and claims history
- The year, make, and model of your vehicle
- Location and population density of where you live/drive
- Your credit history and score
- And other personal details about you and your vehicle
To find affordable auto insurance, the smartest approach is to get quotes from multiple auto insurance agents. Compare each insurer's pricing for the particular coverage you need based on your situation.
Auto insurance agents are professional brokers who can walk you through the various policy options and payment plans from different insurance providers. Working with an agent helps ensure you get appropriate coverage at the fairest price.
Don't Go Without Auto Insurance Protection
Whether it's legally mandated where you live or not, having sufficient auto insurance is critical. The costs of being underinsured or uninsured if an accident occurs can financially devastate you and your family for years to come.
By understanding the key types of auto insurance and working with reputable auto insurance agents, you can find affordable protection that keeps you, your vehicle, and others safe on the roads.
