I ran across this article the other day...
What is auto insurance?
Auto insurance policies are purchased to minimize the personal financial impact associated with motor vehicle accidents, or other incidents, that may affect automobiles you own and drive. Risks and financial liability associated with automobile ownership include medical expenses for injured persons, property damages associated with repair of vehicles involved in an accident, as well as non-accident damages that may result from storms, theft, vandalism or natural disaster. Insurance companies provide auto insurance through personal auto policies. A personal auto policy is a contract between you and your insurer, specifying each party's rights and obligations. Essentially, your insurer promises to provide specific coverage to you in exchange for your payment of specified premiums.
Why do you need it?
All states require you to be financially responsible when driving a car. Depending on your state, you may be required to purchase auto insurance or post a bond. State law (and/or your lender) generally specifies the minimum coverage amounts for auto insurance. You may find it necessary to purchase greater coverage. In order to protect your auto investment, pay for necessary medical expenses, cover your legal liability, and cover any additional losses related to automobile ownership this additional step of purchasing greater coverage may be a necessity. If you cause an accident that results in damages over and above the limits of your insurance policy, your personal assets and future earnings may and will be put at risk.
When to get it
You need to purchase auto insurance whenever you buy a new or used car. You may also need to reconsider your present policy if your family situation changes. You should review existing policies from time to time to ensure adequate coverage. Due to the fact of marital status, number of children and asset levels may change over time thus you needing to increase your policy coverage.
Information About Automobile Insurance Policies
Automobile insurance policies offer numerous types and amounts of coverage, depending upon an individual’s needs. There are numerous variations of automobile insurance coverage and amounts, automobile policies generally which offer four areas of coverage: Liability, Medical Payments, Uninsured and/or Underinsured Motorists, and Coverage for Physical Damage to Your Vehicle.
1. Liability:
This is probably the most important type of car insurance, and it's required by most state auto insurance laws. Liability car insurance protects you against the cost of damage and injury that you cause to another in an automobile accident.
It's actually made up of two different policies, bodily injury liability, and property damage liability. As you might guess, bodily injury insurance protects you from the cost of personal injury to others, and property damage insurance protects you from the cost of damage you cause to any physical property.
You've probably seen automobile policies described by three numbers (like 50/100/25). These numbers refer to auto liability insurance.
They're usually called the split limits of liability insurance. Under our example auto liability insurance policy, you'd be covered for up to:
•$50,000 worth of bodily injury caused to another person
•$100,000 for bodily injuries caused to everyone
•$25,000 worth of property damage.
2. Medical Payments (Med Pay):
By offering medical payments/personal injury protection, your automobile policy will cover you and your passengers' medical expenses if you are injured in an automobile accident. Medical payments/personal injury protection also protects you as a passenger in someone else’s vehicle. “Med Pay” coverage only pays for physical injuries. It does not cover pain, suffering, or lost wages caused by an automobile accident.
3. Uninsured or Underinsured Motorists:
Protects you against drivers that may have caused the accident but are uninsured or underinsured. “Uninsured or underinsured motorist” coverage is also liability coverage for underinsured or uninsured drivers that you may collide with.
4. Coverage for Physical Damage to your Vehicle:
Protects your vehicle against physical damage caused by specific perils. Individual automobile policies have different levels of peril coverage. There are two types of coverage: collision, which covers only collision damage, and other than collision (also known as comprehensive coverage), which covers all risks such as vandalism or fire (with specific exclusions). Individual automobile policies will define the perils your vehicle is covered against and the physical damage coverage included in your policy.
As with most insurance products, automobile insurance policies are comprised and purchased based on each individual’s needs. There are specific exclusions, provisions, and limitations to each type and amount of coverage defined in individual automobile policies. Endorsements can be added in order to customize individual automobile insurance coverage.
Premiums
Automobile insurance premiums are written on an individual basis with an individual’s personal statistics taken into account to determine the cost of the policy.
Here are some key factors associated with general automobile insurance premiums:
• Operator Age
• Operator Gender
• Number of Operators
• Number of Vehicles
• Location
• Driving Record
• Type of Vehicle
Hope this helps
Dan D.
Salt Lake, Utah
