Auto insurance is one of those
requirements for driving a
car, along with a valid
driver's license. Although
indemnity obligations may
vary, every state except New
Hampshire requires some sort
of policy before you can drive
on public roads. In
California, drivers may have
their vehicle impounded if
caught driving without the<
more

Auto insurance is one of those
requirements for driving a
car, along with a valid
driver's license. Although
indemnity obligations may
vary, every state except New
Hampshire requires some sort
of policy before you can drive
on public roads. In
California, drivers may have
their vehicle impounded if
caught driving without the
basic coverage.

Typically, drivers are
required to cover the loss and
damage to the other car. The
obligatory policy protects the
'third party' and the
financial consequences of
their loss, damage or injury
caused by your vehicle. Most
of the time it is optional to
cover your own vehicle against
damage. Of course the law may
vary according to state, so
check with your insurance
broker to determine your
minimum requirements.

There are a number of factors
that determine the insurance
rate. Age, driving record and
type of car help underwriters
calculate the risk to the
insurance company and the
premium amount. In some
instances, the rates may be
set by law.

When the premium is not set by
the government, insurance
companies usually determine
the rate from the calculations
of an actuary based on
statistical data. Since women
get in fewer accidents, their
cost of coverage may be lower.
But if the woman drives long
distances to work, this may
adjust the rate upward.

Liability insurance covers
claims against the specified
car owner and those who may
drive the car. The coverage
may exclude others at the
policy holder's address unless
they are added to the policy.
The coverage may be
car-specific and may not cover
the holder if he or she drives
another car. Check with your
insurance agent before you
choose your plan.

The policy will spell out the
maximum liability to be paid
in the event of an accident.
The owner may be liable for
ancillary damages caused by
the accident. For instance, if
the driver hits a power pole,
the insurance will pay for the
pole but not the
loss-of-service claims.

Some policies will cover the
owner in a rental car while
others may not. When in doubt,
you may want to pay the rental
company for the coverage when
you rent a car. It may be
worth the peace of mind.

Collision insurance will cover
damages to your car in the
event of an accident and it is
your fault. When a vehicle is
not worth the deductible, it
is usually not practical to
get this coverage. For
instance; if your car is only
worth $700 and you have a
$1,000 deductible, the company
won't pay you anything if you
are involved in an accident.

Comprehensive will cover your
damages even if you are not
involved in an accident. For
instance, if your stereo is
stolen, this policy may pay
for a replacement. If your car
catches on fire or is damaged
in a hail storm, you may be
covered.

But what if you are hit by
someone who does not have
insurance? You can get
Uninsured/Underinsured
coverage (also known as
UM/UIM) that will pay you if
the other party is at fault
and does not have insurance.
If the other party does not
have enough coverage, this
coverage may kick in and pay
the difference.

You may be able to get rental
coverage with your policy.
This will cover rental
expenses in the event that
your car needs to go into the
shop for a covered loss.

Policies can also be purchased
to pay off the lease or the
loan on the car in the event
that your car is totaled.
Sometimes referred to as GAP
insurance, the policy is
practical if you buy a new
car.

When a new car is driven off
the lot it loses value. Your
loan may be worth $40,000
while your car immediately
becomes valued at $35,000. If
you are involved in an
accident soon after your
purchase, you could be liable
for that extra $5,000. GAP
insurance will pay that
difference.

There are various types of
towing insurance policies.
Some policies require you to
pay for the towing cost up
front and then submit an
application for reimbursement.
Triple A (AAA) offers great
Roadside Assistance coverage
because there is no out of
pocket expenses.

There is no single policy that
fits everyone. Compare the
policies and the various
options to determine which one
is right for you.

Category Autos & Vehicles

Tags Auto, Insurance, Information, -, Car, Coverage