The Importance of Auto Insurance

Written By: Theodore Hoffstrader on June 5, 2009 No Comment

by Theodore Hoffstrader

Although we are dealing with a very basic concept, one can’t help but ask: why is Auto Insurance so important?

Put in the simplest terms, auto insurance is contract between a policy holder and the auto insurance company. This contract determines that the policy holder pays a predetermined premium, and the insurance company pays for any losses (the precise details are specified in the policy).

Auto Insurance provides coverage of medical expenses, property loss and liability. If an accident occurs, and you are at fault, the insurance company will likely have to pay for your medical bills and property bills. Additionally, it would have to pay for any injures that were caused by you to the other driver as well as any damages that were caused to his car. Similarly, if you are involved in a car accident and the other driver is at fault, their insurance company would have to cover your losses as specified by their insurance plan.

This type of agreement effectively shields you from a potential lawsuit if you get into an accident. Furthermore, if you are the victim at a car accident, that is, involved in a car accident caused by someone else, your insurance may cover your medical bills and property damage as well (this is determined by your specific plan). In this event, your insurance company may decide to sue the other driver to recover their costs.

There are numerous factors that affect the premium you would pay for you auto insurance, including: gender, age, marital status, your occupation, your education, the type of vehicle you possess, your credit rating, geographical location, driving distance per year, years of driving experience, previous driving violations, business usage of your vehicle, accident claims, miles driven to work, theft protection and safety devices on your car, and whether you have multiple cars and/or drivers on your policy. For example, a married male driver with no violations and 10 years of driving experience would pay a lower premium than a 17 year old male that just received his license last week.

Living in a big city is likely to increase your premium because the chance of being involved with a car accident in an area that is highly congested are greater than, say, in a rural area where there aren’t as many cars. It is possible to receive a discount on one’s insurance by including safety and theft deterrent devices on cars, as these have been proven to reduce risk of injury and loss.

A good way to get the lowest possible premiums on your Auto Insurance is to shop around. Fortunately, the internet enables us to get multiple quotes almost instantly, and it is quite likely you would find a cheaper auto insurance with the same conditions, as some companies calculate their risk differently (i.e. assign a different risk to a specific geographical location).

About the Author:

Theodore Hoffstrader has been struggling for years with Auto Insurance issues and through these trials has gained expert status. In this article he described the necessity of Auto Insurance. To read more articles that will help you better understand Auto Insurance and might save you money, visit his site, the Auto Insurance Information Highway.