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The Mechanics of Motor Vehicle Insurance


Lots of people have no idea what motor vehicle insurance is. When they buy cars, they pay for coverage without understanding what it is. Of course, if you do not get into an accident, there is no problem since the agreement will just expire. The problem is when you do get into an accident and you are left under the mercy of another party.

Here are the basics. Motor vehicle insurance is an agreement for indemnity. An insurance provider will pay you a certain amount – which usually depends on the value of your vehicle or amount you paid – if and when you get yourself involved in a road mishap. Most states in the USA impose the No Fault policy, which basically means that you can choose to receive payment from your provider even when the whole thing was your fault – except that in this case, you may not be able to file a suit to recover anything from the other person.

There are several kinds of motor vehicle insurance. Collision insurance deals precisely with vehicular collisions and is the most common coverage type being sold all over the US. Depending on your class and on limits set on your license by state laws, you will only be able to avail of certain types of insurance. The government does not require you to get a particular kind of indemnity coverage for as long as you do get one.

The amount you pay to an insurer for the contract is called your premium. Generally, your agreement has no effect if you do not pay your premiums on time. This just goes to say how important they are. Also, if your premium rates are higher, you can get covered for an equally higher amount. You can say that these payments are “installment” payments on your contract.

Motor vehicle insurance is available with almost all providers in the state. There are those that deal precisely with automotive coverage. Some car dealers also sell policies to be paid as part of the purchase price. Since the government has made it mandatory for every driver and car owner to procure coverage, you can already find providers at almost every corner of the road.

If you find yourself in the middle of an accident, the first thing to do is not to call your lawyer. Instead, call your insurer. The thing that you should remember is to always keep your policy in the car as proof of insurance. This will help you a lot in settling any dispute or avoiding getting arrested and your license suspended or revoked. With the No Fault clause in place, things should go smoothly.