Understanding Different Facets of Auto Insurance


Auto insurance is nothing but the insurance you purchase for your vehicle. It is nothing but an agreement between you and the insurance company from which you purchase the policy. You will have to pay monthly or annual premium for the policy you purchased and the insurance company agrees to cover the costs of damages caused during accident. Though it appears to be a simple concept, it has many facets to it that needs better understanding.

In most of the states in USA, it is mandatory for you to carry at least liability insurance. Liability insurance enables you to cover the expenses of the other person’s damages if you are involved in an accident. In some states like New Hampshire, however, it is not very mandatory for you to carry insurance, but you must be able to demonstrate your financial stability to cover all liabilities to other person involved in accident.

There are different coverage and policies offered by numerous insurance companies. The premium rate that you will have to pay differs from company to company and coverage you opt for. One important thing to do before purchasing insurance is to get different quotes from different companies and know about all types of coverage offered. Choose the best option available in the market to make the most of it. Check if the insurance company has the license of state and see if it is a reputed name. Talk to people and find out if they recommend the company, before signing the deal.

Insurance is a requirement even when you are planning to rent a car. There are two things to consider before purchasing the insurance at the rental car office – your credit card insurance coverage and your personal auto insurance coverage. Find out if your auto insurance will cover even rental cars. If they do, then you needn’t purchase a separate insurance for your rentals. Check your credit card insurance coverage. Sometimes, they offer basic auto insurance and it will cover even rentals. If both options do not work out, then you can plan to purchase insurance for your rental car. Mandatory rental car insurance includes liability insurance and the loss damage waiver. Liability insurance saves you from any responsibility to cover damages of the other party involved in accident and loss and damage waiver saves you from responsibility of theft of damage and loss of vehicle.

Another basic concept you need to know about auto insurance is policy renewal and policy cancellation. Insurance companies can cancel your policy under special circumstances. They can do so only when you do not pay your monthly premium, when you are involved in a major traffic violation and your driver’s license gets suspended, or your credit history is very bad. However, they are supposed to issue notices to you before cancelling your policy. If you increase the chances of insurance claim from your company, they might decide not to renew the policy with you again. Even in such cases, they will need to notify you beforehand. Credit card companies keep a track of your driving history and all traffic violations that you commit. It is important to keep your driving records clean to avoid any increase in the premium amount you pay.

Getting auto insurance as soon as you own a car is mandatory to safeguard you from any unforeseen circumstances and help you recover from the damages.