Insurance is one of the most popular means of risk management, second to only securing your assets in a way that someone else can’t misuse them. Every asset is prone to loss, be it your life, your home, or your car. Consumers pay Insurance companies a premium in exchange for cover for their assets.
The premium is based on various deciding factors, such as the value of the asset, the risk involved, among others. Upon damage or loss of an asset, the owner of the asset, or people nominated by them go to the insurer and make a claim, upon verification of the claim, the insurer then makes the payout of the sum assured, i.e. the amount the asset was insured for.
The same holds true for motor vehicles, consumers take out insurance policies from Auto insurance companies to protect themselves from possible auto theft, or an accident. There are various sub categories of auto insurance, road risk being the most popular.
Road risk is probably the most popular as its premiums tend to be the lowest. Road risk covers third party risk, that is, damage to the third party is covered by the auto insurer. A more comprehensive version of road risk is also available, wherein damage caused to, and also by the third party is covered.
Collision coverage protects the first party, and not the third. Collision cover will ensure that in the event of an accident, your vehicle’s damage is covered. This is especially handy if the other person (third party) involved in the accident doesn’t have liability cover. You would end up in a lengthy and tedious legal battle, to sue the third party to pay for your damages.
Other popular and recommended insurance policies are theft, fire and road accident. In such policies there are predetermined lists of damages that are covered; this is agreed upon when taking out the insurance policy.
Medical coverage is quickly gaining popularity with people who previously only preferred the road risk cover. No fault insurance fastens up the process, and negates the need for legal proceedings as there is no requirement for a dispute. Each person is insured by his or her own insurance company, for medical bills, or even funeral expenses in worst case scenarios. Property damage isn’t covered under no fault insurance, however can be covered under other sub categories of insurance. However one should always ensure that they are not duplicating coverage they may have under other medical insurance policies.
Auto insurance which covers liability for injuries and/or property damage done to a third party is mandatory in most states. Failure to have the above mentioned security can lead to anything from a fine, to suspension and/or revocation of the driver’s/ drivers’ license and/or registration. There have also been quite a few cases where failure to comply with the said state’s auto insurance laws have ended with the driver being incarcerated. While driving cross country, drivers should always ensure that they have the required cover to cross state lines, and that their cover is adequate in the state they are visiting.
Lastly, if you are an un-insured driver, you need to get yourself protection in the form of auto insurance at the earliest; this also applies to people who drive with insufficient liability insurance. You can’t rely on the other persons insurance, nowadays there are an increasing number of hit and run cases, and you need to protect yourself, your vehicle, and your family members.