Perhaps the most commonly purchased type of insurance is auto insurance, also called car insurance or car insurance. Although laws vary somewhat, almost all states today require drivers to carry some form of car insurance to legally drive a vehicle on public roads. Penalties for driving without insurance may range from fines to residence or, in case of repeated violations, possibly even a short sentence of imprisonment. Given that drivers insurance is required in almost every state, it is worth having some basic knowledge of the subject.
Types and coverage levels. The type of insurance cover that a person needs and how much to pay for that coverage varies depending on a number of factors, such as the drivers age, his or her drivers post, the age and value of the vehicle, the dollar amount for coverage, and if the vehicle is fully paid. While car insurance can be quite complex, there are four types that everyone should be aware of.
Responsibility coverage is the most basic type of coverage; it protects the driver against any allegations that may arise as a result of an accident or other incident that is the drivers fault. This is usually the minimum coverage that a driver needs to be considered insured. Liability insurance usually has the lowest premiums, but it does not cover any damage to the drivers own vehicle. Therefore, a lower monthly premium must be balanced against the risk of a potentially high economic burden. In addition, most loan lenders require a driver to carry extensive coverage until the borrower has paid the loan in full.
Collision insurance covers part or all of the cost of repairs to the driver in a collision based on an estimate of the project cost of the repairs. While collision insurance can definitely pay for itself in a car crash, monthly premiums are higher than a single debt. Most policies are also subject to deductible, which means that the policy company is responsible for paying a certain amount before the insurance company pays. Deduction fee varies greatly; In general, the higher the deductible, the lower the monthly payments, and the less deductible the higher the monthly payments will be.
Extensive coverage is usually required for vehicles that are still being paid. Many vehicle owners also have extensive coverage for expensive or other valuable vehicles. Extensive coverage covers damage that is not the result of a collision - fire, theft, vandalism and so on - although the exact subject matter may vary quite a bit from one policy to another.
Uninsured coverage will protect you if an uninsured or insured driver hits you or your vehicle. Although insurance is a legal requirement in most places, it does not mean that everyone on the road is insured. This type of coverage means that you will not get stuck with the repair bill if someone is less responsible than you are involved in an accident.
Each type of insurance is available on several different levels of coverage. The higher the coverage (in dollars) the higher the premium will be. The premiums will also increase if the driver is involved in an accident or receives tickets for traffic violations. In addition, premiums are higher for men than for women, for younger drivers and for drivers in urban areas or higher crime areas. Nevertheless, car insurance is a necessity for any responsible driver.