Auto Insurance
An informational guide on automobile insurance.
Below, you will find a list of common questions. By clicking on a question
you will get an answer.
Back in the late 1890's when the first U.S. automobile insurance policy was
purchased, there were barely 100 cars on the streets, nationwide.
Horses and carriages traveled the roads, and the main concern then
for both insurers and auto drivers was any injury those noisy
new machines might do to horses.
Today a motor vehicle accident occurs every second. Auto accidents
cause an injury every 14 seconds, and every 13 minutes a car accident
results in a fatality. More than 31 million accidents occur per
year, at an annual cost of almost $100 billion. Theft and vandalism
are other major perils facing drivers, In fact, every 20 seconds
another vehicle is stolen.
With more than 150 million drivers and 160 million registered
vehicles on the road today, auto insurance is the most widely
purchased of all property-liability insurance. Drivers buy auto
insurance for economic protection against theft, vandalism, and
other risks, but few are familiar with the ins and outs of their
particular policy.
This guide was designed by the Independent Insurance Agents of
America to make it easier for you to know your insurance needs
and the many options available to you. Though this guide does
not represent the provisions of any particular policy, it should
serve as a starting point on your road to finding the best policy
for your needs.
Your car has two unique qualities. First, it is probably one of
the most expensive things you own. Insurance protects your investment
and guarantees you a way of coping with the expense of accidents,
vandalism or theft, as well as securing your financial responsibility
to the bank or other institution lending the money to buy your
vehicle.
Second, when you drive, you are operating a powerful machine,
weighing one ton or more and capable of moving at over 100 miles
per hour. You are responsible for the safety of your passengers,
your fellow drivers, other people's property, pedestrians and
yourself. Insurance helps you live up to that responsibility by
ensuring your ability to cover the costs of potential damages
or injuries.
You are also required to be financially responsible by state laws,
which are best satisfied through your insurance coverage. In fact,
in most states insurance is a prerequisite to registering your
car. So if you want to drive your own vehicle, you must be insured.
Return to Auto Insurance Index
Auto insurance is divided into several different types of coverage:
- General liability covers damage you may cause to other
people's property and injuries to the people themselves.
- Collision covers damage to your own vehicle in an accident.
- Comprehensive (i.e., fire, theft and other non-collision
damage) covers fire damage to your vehicle, break-ins, vandalism
or theft, as well as natural disasters (earthquake, hail, hurricane,
flood, etc.--unless the vehicle is overturned, then it is considered
a collision).
- Medical payments insurance, usually in the range of
$5,000 to $10,000, covers medical expenses for injuries. This
"good-faith" coverage guarantees immediate medical payments
for you, your passengers and other parties, regardless of who
is at fault. It also covers you and members of your household
in any accident involving an automobile, whether you are on foot,
on a bicycle, in a friend's car, etc.
- Uninsured motorist (UM) and underinsured motorist
(UIM) coverage protects you if you are injured in an accident
with others who themselves carry insufficient or no liability
insurance.
- Extra coverages include expenses for towing, labor,
temporary replacement vehicles, etc. These are generally defined
as add-ons or endorsements to your policy.
Return to Auto Insurance Index
Drivers are grouped according to the level of risk each one poses--i.e.,
the amount of loss incurred by insurers within various categories
of policy holders. For various reasons, drivers are categorized
by:
- Sex--Men have more accidents on the road than women.
- Age--Drivers under 25 (and, for some insurers, under
30) are considered at higher risk of having an accident.
- Marital Status--Married drivers tend to have fewer
accidents than single drivers.
- Personal Driving Record--Years of driving experience,
accidents, speeding tickets and drunk-driving offenses are all
factors in determining how much of a risk you pose as a motorist.
- How You Use Your Vehicle--If you commute by car during
rush hours, you're at greater risk of having an accident than
if you only drive for errands and recreation on the weekends.
Drivers who use their own vehicles for business also are considered
to be at greater risk.
- Type of Vehicle--The value, size, weight, age of your
vehicle--even the cost of replacement parts--are essential to
determining the price of your insurance. Larger, heavier vehicles
are considered at lower risk than smaller, lighter ones. Plus,
more expensive cars are costlier to have repaired than economy
models.
The cost of your insurance policy is based on the average cost
of covering actual losses, spread out over your particular "rating
group" as a whole. Of course, you may never have an accident
or have your car stolen, and therefore will never need to be compensated.
But others in your category may not be so lucky. Your premium
will help to pay for their losses, just as their premiums would
help to pay for yours. In other words, you are investing a little
today in case you need a lot tomorrow; your investment is pooled
with others, and the pool pays for your loss.
For example, if you are a 23-year-old man and you park your new
sports car on a downtown street in a large city, you will likely
pay more for insurance than a 37-year-old woman who parks her
four-wheel-drive in the suburbs, simply because--based on average
losses--you have a greater chance of having an accident or being
the victim of auto theft.
Return to Auto Insurance Index
Free Quote
Car Insurance America provides you the opportunity to request an auto insurance quote online.
Definitions
A list of coverage terms to help you understand your policy options.
Frequently Asked Questions
A listing of common automobile insurance related questions.
Free Quote
Car Insurance America provides you the opportunity to request an auto insurance quote online.
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