Motor vehicle insurance is contract of risk that insurers take from a vehicle owner for damages in property or liability from a person in case of accidents. All motor vehicle owners are obliged to get the insurance from a provider of their choice. There are different contracts that can be entered into depending on the coverage of the policy that the owner purchased.
Required Coverage
The most important policy for motor vehicle insurance is the liability coverage. This pays for the damages in property and/or injury to a defaulted party when the owner is proved to be liable for the accident. The state requires that everyone who owns vehicles should get this basic policy. Without it, the owner could be penalized as this is considered a state violation. Not only that this is required by law, it also saves the owner from taking out substantial money from his own pocket to answer the liability. With the insurance, he can pay for the repair of the damaged car of the defaulted person, pay for the medical bills for the injury he caused to the other person or pay for the lawsuits in case the defaulted party charge him in court.
Supplemental Coverage
Since motor vehicle insurance is important to cover the risk faced by the owner from road accidents, some owners get coverage for other accidental circumstances.
- Collision. This covers the damages of the owner’s car in case of collision to another car or object. Financing institutions usually require collision coverage for loaned cars until the amount is paid in full.
- Comprehensive. This is also known as policy other than collision. The comprehensive policy covers damages due to fire, theft, vandalism and weather.
- Uninsured/Underinsured. In this policy, the insurer takes the risk of paying for the owner’s medical bills in case the person at fault does not have insurance or does not have enough insurance to cover the liability.
- Road Assistance. There are providers who offer coverage for towing or roadside assistance in case the car breaks down during accidents.
The premium that the owner has to pay depends on the policy he purchased. The lesser coverage, the most likely he pays less. However, there are other factors that determine the premium for motor vehicle insurance such as the type of vehicle, the owner’s age, the driving records, the credit history and many others. It then pays to have as many prospective providers to choose which among them offers the lowest premiums.
