Auto Insurance Demystified

Auto Insurance is a contractual agreement between you and an insurance company with the intention to defend you against unforeseen monetary loss due to accident, damage or theft. You pay your premiums regularly while the insurance firm absorbs or pays your losses in accordance with lay down rules. It is a form of economic protection against any misfortune relating to vehicular activities. Any demand (for compensation) made to the insurance firm in respect of such legally binding agreement, in any eventuality relating to your vehicle, is termed auto insurance CLAIMS. Auto insurance is a personal obligation of every vehicle owner in most countries, including the United States of America.

Three Important Aspects of Auto Insurance

The major aspects of auto insurance include: property, liability and medical aspects. Property insurance claims deals with theft or damage to your car on which you have done auto insurance. Liability insurance claims deals with your official or legal responsibility to others for physical injury, asset losses or damage. Medical aspect deals with cost of treating injuries or other medical expenses.

Auto Insurance Fundamentals 

1. More often than not, your personal auto insurance policy only covers driving for personal reasons; running household errands, your office hour activities, vacation or trips to another city, etc. However, your auto insurance policy does not cover the use of your vehicle for profitable ventures such as renting it out or using it to supply transportation to other people for profit. 

2. Ideally, your auto insurance policy should cover whoever is driving the car at the time of incidence, provided they are listed on the auto insurance policy; such persons may include family members, dependants and personal drivers, depending on the policy terms.

3. Your auto insurance policy may also provide cover for someone who, though is not on your insurance beneficiary list, drives your vehicle with your approval. 

Why Auto Insurance is Important  

Auto insurance is very necessary for anyone who owns a vehicle or drives. It is as important as the vehicle itself. Auto insurance helps a great deal to protect you from any unforeseen situations, vehicle damage, loss or theft. It acts as a viable cushion effect to alleviate financial distress in case of any eventuality with respect to your vehicle or its use. Your understanding of this fact is enough to go for auto insurance. 

However, before choosing an insurance company or opting for an insurance policy, try sample different insurance companies, their policy terms, their premiums, benefits and other issues of concern. Once you choose an insurance company, meet their expert to explain to you the different forms of auto insurance available and the terms. Ask questions if there is any item you don’t understand in the insurance policy document. Do not sign auto insurance documents based on presupposition or assumption. Ideally, any auto insurance policy should be active for between six months and one year. So, it is important to understand the active period of your auto insurance. 

There instances when you can not avoid buying into an auto insurance policy. An auto insurance policy becomes inevitable when buying certain kinds of vehicles in which your initial premium will be added to the cost of vehicle while the rest is spread over a period of time. In that case, if you must purchase that choice of vehicle, then you have no option but buy into such auto insurance policy.

Finally, your understanding of auto insurance as well as your discretion, comes to play when choosing a viable auto insurance policy. So, choose wisely.

To your success!