The purpose of insurance, no matter what type, is to provide protection for the insurance policy holder in the event something unexpected happens – most often bad things. In order to obtain insurance protection, you must purchase an insurance policy from a company that sells insurance. And, in order to be protected against having to pay for the aforementioned bad things out of your own pocket, they must be specifically listed in the insurance policy as being “covered.” With respect to car insurance, that generally means motor vehicle damage resulting from an accident; medical expenses incurred by the driver as a result of injuries sustained in the accident; and medical and vehicle expenses of the other driver.
And whether your insurance company pays for these expenses or the other driver’s insurance company pays often depends on who is “at fault” for the accident. This may be determined by police and insurance investigators.
The bottom line is that it is very wise to purchase car insurance so that in the event you need it, you have it. It’s all about risk. Also, each state has its own regulations and requirements regarding car insurance. Most states require that car owners have basic car insurance.
Who Sells Car Insurance?
It is hard to watch an hour of television these days without seeing at least one commercial for an insurance company. Some of the big insurance companies include: Nationwide; State Farm; Geico; Progressive; Allstate; and Liberty Mutual to name a few. There are also many smaller, local businesses that sell insurance. It is very important to review and compare costs and scope of coverage when choosing a car insurance company.
Car Insurance Rates
Like most things, you get what you pay for. The more comprehensive and inclusive the coverage, the more expensive the premiums will be. If you get the absolute minimum protection in your policy, you pay less. If you want better protection, you pay higher prices.
In addition to the scope of coverage, insurance rates are determined based on many different factors. For example, insurance premiums are much higher for young drivers and on brand new cars. The reason for this is relatively obvious. Research shows that young, inexperienced drivers get into more accidents than more experienced drivers. Since insurance companies will likely have to pay for damages incurred by young drivers, their rates are higher. In the case of brand new, expensive cars, insurance companies know that they will have to pay more for accidents involving those cars simply because the cost of the cars is higher. It will cost more money to repair or replace an expensive car versus an older, less expensive car.
It is important to know what your “deductible” is, if any, on your car insurance policy. A deductible is an amount that you have to pay before the insurance company kicks in to pay. For example, if you have a $1,000 deductible on your car insurance policy, it means you will have to pay for the first $1,000 in damages before the insurance company will pay.
It is important to discuss with your insurance agent all possible options when looking at policies and it is crucial to read each and every line of your insurance policy, even though it is boring and tedious reading. It could mean the difference of thousands of dollars if you ever get into an accident.