Auto Insurance is referred to as the arrangement between you and a company that shoulders the responsibility of compensating you for any loss you have incurred. This includes the death of a family member; the destruction of any property including your house, car or even yourself, i.e. if any body part of yours was insured and it had then been injured; the expenses required for the treatment would be covered by your insurance. If you had insured your life and then passed away unexpectedly then your heirs/successors would reap the benefits provided by the insurance company.
This article focuses on auto mobile insurance.
What is an Auto Insurance?
Auto insurance is mandatory in most countries and provides you with adequate financial protection in case of any mishap involving your car; accident, theft etc.
In exchange for you paying a certain amount of money each month, the company takes care of any damage in the form of:
- Asset: This comprises any of form of destruction to your car including damage and theft.
- Accountability: The legal accountability held by you to provide others with compensation for injuries caused by your car; including destruction to physical property.
- Medical: The amount needed to recompense peoples for treating wounds, rehab and maybe even payment required for a funeral.
The amount you have to pay per month differs according to the plan that you have taken as auto insurance is flexible and priced according to your customizations. Policies are usually taken out for a couple of months or a year and are renewable.
What is covered under auto insurance?
Auto policies differ; however the majority of them insure you and your family and anyone who was in control of your car at the time (with your knowledge).
Auto policies generally only cover personal driving. For example, if you’re driving your car to work, on the way to a recreational outing or any other personal reasons. Your policy, however, does not extend to operation of your vehicle for commercial purposes. For instance, meeting with clients to discuss business opportunities, delivering services on behalf of your employer, etc.
Auto insurance also doesn’t cover your vehicle if your job is inclusive of transporting people from one destination to another.
Compulsory auto insurance:
Automobile insurance requirements vary from country to country and the requirements also differ based on which company you take the insurance from. Although, most lenders require:
Physical injuries liability:
Covers the expenses incurred if you cause harm or even death of another driver while commuting in your vehicle.
Refunds the damages caused by you or anyone else driving your car at the time when damages were incurred.
Other types of auto insurance:
- Collision: It repays you when you’ve crashed your car with any object; even when you’re the guilty party.
- Other coverage includes being insured against any form of damage that isn’t caused by theft or a collision. This includes thunderstorms, fires, vandalism, any form of damage incurred due to natural forces, even comets!
- Glass coverage: Insures your windshield against damage (a common occurrence). Some companies also provide insurance for your side mirrors, rear view mirrors and sunroofs.
The depreciation value of cars increases in compounds yearly. The insurance only covers the commercial value of your car; not what you had originally paid for it. Therefore at the time of insurance claim there may be a gap between what you paid for the car and what the insurance company actually pays you. Gap insurance takes care of this and makes sure that you’re reimbursed how much ever your car’s original market value was.