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Fundamentals concepts to understand how auto owners’ insurance works


Insurance is mandatory in most of the states in the US and even if it isn’t then automobile owners must have insurance cover in their own interests.  Even a small repair could cost a fortune and in the event of a bigger accident one can only imagine the medical and repair costs that one would be faced with.  If you have to legally drive on the road, you must have insurance of at least some basic cover.

There are a various options that you could choose from but it is important to understand the meaning of auto owner’s insurance.

When you decide to purchase an auto insurance policy, a monthly fee or a premium is charged by the company and an agreement is drawn (the policy) where the company will commit to fixing your car, as well as the damage to the other’s property, the medical bills and other things that have been agreed upon.

The insured usually has one-time payment that is predetermined and this is known as the deductible which will be paid by the policy holder at the time of the accident.  This amount will remain the same irrespective of how much the insurance company will have to shell out to fix the damages that are the outcome of the accident.

There are different types of coverage available and it is mandatory to have some basic coverage to be able to drive around in the US.  The most basic of them all is the liability coverage which will allow you to drive around legally and in the event of an accident the basic predetermined amount will be covered by the insurance company to fix your car in case you hit something, someone, or if you hit another vehicle.

The next type of coverage is the comprehensive and collision which is also known as full coverage and pretty much covers everything.  Here also the insurance provider will pay the predetermined amount and fix your car for some types of accidents.  Here also the deductible will have to be paid as a one-time payment and might range anywhere from $100 to $500.  The deductible will be decided while purchasing the policy and the higher the deductible the lower the premium and the lower the deductible the higher will be the premium.

Get quotes online or alternatively, ask your insurance provider about the cover that would be best suited and avoid taking a coverage that is unnecessary.