What is general auto insurance? At its essence, car insurance guarantees the protection of the car driver, in the event of physical or material damage. This applies to both drivers and also passengers in the vehicle at the time of the accident.
An insurance policy, when a wreck does happen, covers the costs of damages caused by the insured vehicle.
The subjects involved in the drafting of an insurance contract are:
- The Insurer
- The policyholder and or driver
- The third-party, who may have to be compensated in the event of an accident caused by the insured motorist
Insurance makes it possible to get a certain amount of payment in the event of an unexpected wreck. It is an agreement that gives us guarantees in the case of unknown and unexpected events. Insurance contracts guarantee, up and to the policy limits, a claim payment. This is in exchange for the payment of a set premium.
Insurance companies are in some respects similar to banks. They collect monetary liquidity to invest in active transactions. The insurer spreads the risk of claims over thousands and even millions of policyholders.
The insurer is the one who stipulates a large number of policies that allow the high likelihood of turning a profit. In general, insurance works as a way that is based on payments by policyholders, who do not collect capital, to guarantee payment to those who have suffered damages.
WHAT IS THE POLICY PREMIUM?
The policy premium is the price that the insured pays to the insurance provider in exchange for the guarantees given to set forth in the agreement. With the payment made, the insurance contracts the right to indemnify to third parties, within the agreed limits.
The payment of the premium at the time of signing the contract is very important, otherwise, there will be no active legal contract. If the premium is not paid, the insurance company can suspend the coverage.
If payment is made, although late, the insurer may or may not reinstate the policy. Some companies charge significant fees to reinstate a policy and might even increase the premium.
WHAT DOES AUTO INSURANCE COVER?
Auto insurance covers the physical damage to third parties’ property, people, and even animals. These damages are usually from vehicle to vehicle crashes, accidents, thefts, and coming into contact with animals while driving.
Auto insurance provides compensation that kicks in after a claim is filed up and to the set amount of limits set forth in the policy. This is why it is so important to buy the right amount of coverage, so you can be adequately insured.
No compensation is legally due, in the event of intentional damage caused by the policyholder. This includes things like fraud and adding additional damage to a vehicle that has been involved in an accident. If there are physical injuries sustained by the driver, medical reimbursement may be paid up and to the limits in the policy.
TYPES OF AUTO INSURANCE
AUTO LIABILITY COVERAGE
This type of basic policy does not provide coverage in the event of theft to the vehicle. It is a limited type of coverage that provides coverage to the other person’s vehicle, in the event an accident occurs. It also provides medical compensation to those injured in a crash you caused.
Liability car insurance will not provide repairs to your vehicle, in the event you get into an at-fault accident, nor will it replace your vehicle. This is why most people only get this type of very cheap car insurance no deposit for older automobiles that have little value.
PERSONAL INJURY LIABILITY
The liability coverage for physical injuries covers the injuries or death of third parties in accidents in which you are deemed guilty.
It covers the driver and passengers of the other vehicle, as well as motorcyclists, bicyclists, or pedestrians who received damage from your automobile.
This covers payments for medical expenses of the injured party, funeral expenses in case of a fatality, and other miscellaneous costs.
Note that personal injury liability does not cover you nor your car in any way.
FIRE WARRANTY AND THEFT
The fire guarantee covers, as it indicates, the risk of a fire occurring to your vehicle. It also includes compensation for the consequences of an explosion, lightning or spontaneous combustion. Although these events are rare, they sometimes do happen.
It also provides coverage for the theft of the vehicle, but also the attempted theft, and of course any fire that takes place.
The attempted theft is often covered by the theft guarantee of your vehicle. To benefit from this compensation, the attempted theft must be proven to the insurer by physical evidence.
This evidence can be a fractured lock, a forced lock, a broken window, and so forth. Otherwise, the insurance company may refuse to compensate the insured.
COLLISION COVERAGE
Collision coverage protects your vehicle when you are responsible for an accident. If your vehicle strikes another car or when your vehicle hits an object, you are protected up and to a specified amount set forth by your policy agreement.
COMPREHENSIVE INSURANCE
Comprehensive insurance is a type of coverage against theft or car damages as a result of an accident.
It covers damages resulting from fire, vandalism, explosions, riot, earthquakes, and just about anything that is not related to a vehicle on vehicle collision.
Comprehensive insurance gives you the assumption of your own repairs, in the event of loss or damage caused by a third party or by yourself. Even if you are responsible for the damage caused, you can file a claim and be compensated for the damages caused.
But you have to ensure your license is valid and your blood alcohol level is not above the legal limit. You also cannot have driven while under the influence of narcotics.
In the case of non-compliance with one of the clauses of the conditions of your contract, your claim might be voided altogether.
THIRD-PARTY INSURANCE
This covers a third driver that is injured after an accident. The expenses caused by the accident of the car owner who is the rightful policyholder.
Car insurance to third parties covers car damage, physical damage to the other driver, and medical expenses. There is also financial compensation in case of disability and death, among others. However, it does not cover expenses for the theft of the vehicle.
CONCLUSION
Auto insurance is compulsory in most states. If you are caught without a valid insurance policy you risk being fined or even serving time in jail. By comparing general auto insurance rates online, you can find good deals in a matter of minutes. To start your free quote, just enter your zip code.
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