What is Auto Insurance?
We start our list of Auto Insurance FAQS with the answer to the question of What is Auto Insurance?
Auto insurance is just like all other insurance, in that it protects you when accidents occur. Vehicle owners get insurance, on their cars, trucks, or other vehicles and it is used as protection for all drivers, from losses that can occur as a result of accidents while operating your vehicle. You agree with the insurance company that you will pay them a yearly fee (called a premium) and they will protect you from financial loss caused by these accidents. They will pay your losses up to a maximum amount as determined by your policy.
The amount they pay depends on the coverage you elect to have, which will ultimately affect your premiums. There is a minimum coverage that is required for each driver, and it differs depending on your state/province which covered in the minimum coverages section. Coverages include liability coverage of bodily injury, property damage, and medical payments (mandatory) against others, and the collision and comprehensive coverage that protects your own vehicle. Check out the types of coverage section to learn more about each coverage.
Why Do We Need Auto Insurance?
The second common auto insurance FAQS is Why Do We Need Auto Insurance to drive? The main reason is for financial security and piece of mind.
How many people have the money to pay for the results of car accidents? Not many. If the accident is caused by you, you would be solely responsible for all the damages caused. These include, the other motorist’s car, the other motorist’s personal injuries, other people’s injuries that were involved and any other damage caused. This total could add up to tens, or even hundreds of thousands of dollars!
Without insurance, you would be responsible for paying this bill, and may have to work many years in order to pay off this debt. Even minor accidents can produce thousands of dollars in property damage and medical expenses! Having insurance protects you against this expense, and I would rather pay $2000 a year for insurance then risk getting into an accident and having to pay tens of thousands of dollars, to fix the other motorists car, and many more thousands in personal injury!
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