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Auto Insurance Basics

It can be confusing for people who are looking for auto insurance. The terminology used and what is needed can be overwhelming to some. People have a lot to think about when it comes to liability, collision, premiums, medical coverage, and it just goes on. Understanding insurance can be quite a challenge. It is a benefit to anyone to learn the basics of auto insurance, in order to make the best possible decisions as to what they need.

Auto insurance covers a driver financially in the event of an accident or what is considered an act of god. Auto insurance will also cover damages that the driver causes another driver if the accident is their fault.

Auto insurance is required by law in every state. Refusal to buy auto insurance will face penalties. These include revoking a person’s driver’s license, fines, and even jail.

As a driver we pay auto insurance companies a premium to cover us in the event of damages and injury. There are things considered an act of god such as a tree falling on your car, hitting a deer, etc. No matter what the situation, the driver must file a claim. After a claim is files with the auto insurance company, a deductible is paid.

The amount that is paid to an insurance company is based upon many factors. Some of these factors include deductible, type of coverage, driving record, driving frequency, liability, collision, and statistics special to one’s local area.

All states have different insurance guidelines. Although this is the case, there are two major types of insurance coverage. These are Liability and collision.

Liability insurance covers any property and personal injury to other parties as the result of an accident. If you as the insured cause an accident, your insurance company will pay the damage and expenses of the other driver.

Collision insurance will cover the driver in the event of an auto accident. Many people add other types of insurance to this including windshield damage, comprehensive and more.

As an insured driver, a person pays a premium every 6 months when the policy renews. This payment method and schedule can be changed. Many people decide to pay monthly.

You can lower your overall premium by adjusting deductibles and coverages. If you raise your deductible, or remove certain types of coverage, your insurance premium will be lower.

As you can see, auto insurance does not have to be a confusing battle. When people have a basic understanding of how insurance works, they will be confident in making the right decisions.