Auto Insurance is one of the most heavily regulated industries in the United States. It is also one of the most profitable, as well. The insurance industry works hand-in-hand with local, state, and federal governments to protect both drivers and the automobile carriers themselves. Auto insurance provides financial protection for you, your family, and other drivers on the road. By purchasing the right kind of policy, you can help minimize your chances of being involved in an accident, while at the same time increasing your financial protection from losses that might occur due to auto accidents. The question that remains, however, is how much should an individual pay for auto insurance?
An auto insurance company will charge a premium based on a number of factors. The amount is based on the risk that the insurance company perceives that it will have to pay out in the event of a claim. Factors such as age, gender, marital status, driving record, whether or not the vehicle is paid for damages by the owner, and where the vehicle is stored will all affect what kind of premium an individual will be charged. The premium will also depend on the type of auto insurance policy that the individual is seeking. There are three main types of auto insurance policies that an individual may purchase.
Bodily Injury Limitations: Bodily injury limitations are limits that specify how much compensation a policy will pay out if an individual has been injured. For example, bodily injury limits that cover an automobile in a minor accident may not provide coverage for an automobile that is totaled. Other types of bodily injury limits that may be in place include personal property protection. These limits are usually found in policies that provide coverage for medical payments and loss of earnings if an individual is unable to work after being injured.
No-Fault: The primary reason why people get automobile insurance is so that they will not have to pay for medical expenses that exceed their current insurance limits. However, in some cases, an individual will find themselves in situations where they will need to file a personal injury claim or a claim for pain and suffering. No-fault insurance provides protection for individuals that have suffered injuries that exceed the amount of coverage provided by their personal injury limits.
Personal Injury Coverage: Personal injury coverage can provide funds to pay for medical expenses and other costs that are incurred as a result of an automobile accident. In most cases, this type of insurance will payout to the policyholder only, but occasionally it may payout to a third party, such as the other driver in the case of a vehicular accident. It may also cover damage to another person’s vehicle or even their property if the policyholder was the cause of the damage. Typically there are limits to the amount that the policy will payout.
Liability Insurance: This type of insurance protects policyholders from lawsuits related to vehicle accidents. Some states require that policyholders take out liability insurance. Some states do not, however. Liability insurance does not payout to the policyholder or his or her family in the event of a car accident, and typically limits the amount that the policy will payout to the policyholder’s dependents.