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The Fundamentals Of Auto Insurance

By: Chris Channing


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In most states throughout the United States auto insurance is compulsory. Some states, however, do not require an individual to buy auto insurance. For instance, the state of Virginia requires that residents pay $500 to the state annually per vehicle if they do not wish to purchase liability insurance for their vehicles.

There can be penalties you may have to pay if you do not get auto insurance. The penalties can vary from state to state but they normally include a fine of some sort, license or registration suspension and even revocation, and also you could sever jail time in some states. Normally, the lowest form of insurance required by law is third party insurance.

Liability is a form of auto insurance coverage. Liability is available in either a split limit policy or a combined single limit policy. A combined single limit groups property damage coverage and bodily injury coverage as one. The split limit policy splits bodily injury and property damage into two separate payments. Another form of coverage is collision coverage. Collision coverage is coverage that provides payments to repair a vehicle that has been damaged. Collision coverage also provides payment of the cash value if the vehicle cannot be repaired.

Coverage for a vehicle that receives damage from something other than a collision is called comprehensive coverage. Damage other than collision would be considered fire, weather, vandalism, or theft. There is also rental coverage or loss of use coverage. Rental coverage provides payment on rental expenses associated with an insured vehicle that needs repair due to a covered loss.

Formerly car insurance companies only paid for the cost of towing a vehicle if it was related to an accident covered under the insurance policy. Because of this car towing coverage or roadside assistance coverage was implemented. Car towing coverage pays for non-accident related tows.

There are a few factors that can determine the cost of insuring a vehicle. Men generally have higher rates to pay compared to women. This is because male drivers tend to have higher involvement in accidents then women do. Age can also affect how much you pay on car insurance. Generally teenagers with no driving record have higher car insurance premiums. If a teenage student has a good academic record it is possible for them to get a discount from their insurer. It is also common that insurance premiums will start to drop around the age of 25.

A fixed contribution that you have to pay whenever you car is repaired under your car's insurance policy is known as an excess payment. There is compulsory excess and voluntary excess. The minimum excess payment that your insurer will accept for your policy is the compulsory excess. You can pay an extra amount in the event of a claim on your policy, this is known as a voluntary excess. If you pay a bigger excess then it is possible to get a lower premium from your insurer.

When you're deciding on insurance for your automobile it is important to remember all the things listed above. You should choose the coverage plan that you feel is right for you. If you choose to not get auto insurance then be careful because there can be consequences that follow.

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