Automobile Insurance: Everything you should know10 min read
Automobile insurance ensures that one is protected from uncertainties that can lead to unplanned expenses in one’s life.
Among other kinds of insurance policy, automobile insurance covers your car insurance, motorcycle, or even boat insurance, depending on the locomotive means that you often make use of.
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Today we’ll teach you what you should know about automobile insurance and everything it will cover for you once purchased. Let’s get started…
Definition of Automobile Insurance
According to Merriam-webster dictionary, Automobile Insurance is the insurance that protects you against loss arising from the destruction of or damage to an insured motor vehicle.
Meanwhile, when life calamities such as flood, fire outbreak, earthquake, etc. hit your automobile (car, motorcycle, boat, etc.) your automobile insurance company will take care of the expenses including hospital bills if the driver happens to sustain injuries.
Some automobile insurance companies also include funeral bills and other death benefits the affected family will get from the insurance company.
In another sense, auto-mobile insurance can be seen as insurance coverage for automated land vehicles; some of these vehicles are trucks, private cars, pickup cars, motorcycles, etc.
What is auto insurance? – Automobile Insurance
From our view and from what auto-mobile insurance covers, automobile insurance can be seen as an agreed contract that exists between the auto insurance company and the insured individual; and the aim is to protect the insured individual from financial loss which may come in form of accident, flood, theft, etc.
Moreover, the insurance policy that your insurance company will give you depends on the things you want them to cover.
For instance, there is premium auto insurance – this insurance policy will take care of the insurer’s car (if damaged), take care of the affected individual (if an accident happens) and also pay hospital bills for the insured individual.
In a simplified form, an automobile insurance policy usually covers three (3) things majorly and they include:
- Medical
- Property
- Liability
Medical – Automobile Insurance
The medical aspect means that your automobile insurance company will cover the cost of treating any injury that the registered individual sustains.
The automobile insurance company you registered with will also take care of lost wages as well as funeral expenses.
Property – Automobile Insurance
This talks about property losses of damages that will happen to your insured automobile.
Liability – Automobile Insurance
In this section, your insurance company will take care of your property damage and other related legal responsibilities.
Moreover, in the United States today, automobile insurance is compulsory in some of the states in the country; although the policies vary from state to state.
In the U.S majorly and other countries as well, an auto insurance policy can be customized by individuals depending on the exact needs they want from the auto-mobile insurance.
Insurance policy be it life, health, auto insurance are being billed monthly or annually.
What will automobile insurance cover for you?
The automobile insurance policy that you’ll purchase from the auto insurance company will cover both you (the insured individual) and your family members.
The most amazing feature of this auto insurance is that even if you or any member of your family is driving a borrowed car, you’re still covered by your automobile insurance company if anything (such as an accident) happens.
On the other hand, when you give your insured car to someone (with your consent) to drive, your car is quite covered even if the person you gave your car had an accident with it.
Once your car is insured, regardless of anything you’re doing with it; be it taking a trip, sports, dropshipping (self-oriented, not for commercial drop shipping), both you and your car are insured.
On the other hand, since what you agreed with your auto insurance company is that your car is a personal car for personal purposes, if you later migrate and start using your insured car for transportation services, such as Uber, your auto-mobile insurance company will not get you covered if any uncertainty happens to your car.
Furthermore, if you will surely use your car for commercial services such as delivering Pizza, Uber services, Lyft services, you should discuss it with your auto insurance company and they will ensure you with their premium auto insurance policy for commercial purposes.
Must I purchase an automobile Insurance policy if I reside in the U.S?
Depending on the state that you reside in the United States of America, some states mandated that every individual must purchase auto insurance for their car, boat, motorcycle, etc. while other states made it optional for its inhabitants.
Moreover, as one who lives in the United States, we recommend that you purchase an automobile insurance policy to prevent unnecessary expenses that occurs when life calamities hit you.
So while pricing the car you want to purchase, you should also budget the auto insurance that you won’t purchase. You should be aware that the price of your auto insurance lies in the car model you’re using.
For instance, if you’re using a V8 engine of the latest model of your car product, expect that your auto insurance price will never be the same with someone that is using a V6 engine car.
Meanwhile, to save money when purchasing your automobile insurance policy, read my guide here.
Is an automobile insurance policy compulsory for me?
As we discussed above, it depends on your state in the U.S and the law that governs your state. But to avoid spending money when life calamities approach you, we recommend that you purchase an automobile insurance policy.
When an accident happens, if the driver is insured by the auto insurance company, all he/she will request is for life because any injury or crash in his car will be taken care of by the auto insurance company that he registered with.
Types of automobile insurance for private passenger
#1. Private Passenger Auto No-Fault
This type of automobile covers the protection for personal injuries that insured individuals will sustain as they drive their cars.
#2. Private Passenger Auto Physical Damage
This covers the damages that the primate individual will face when his vehicle collides with an object or with another car.
#3. Private Passenger Auto Liability
All the bodily injuries that the insured individual will sustain will be covered in this automobile insurance type. Also, properties that may get damaged from the insured car is covered as well
What is automobile insurance for commercial entities?
This is the category of automobile insurance that provides coverage for vehicles that conveys loads from one location to another.
In this commercial auto-mobile insurance policy, the auto insurance company’s insured over 4 different types of vehicles, including the shops they are delivering the goods to, garages, parking spaces, etc.
The vehicles included in the commercial entities carry loads that weigh more than a thousand pounds.
Meanwhile, the price for this type of automobile insurance is quite huge because it covers a lot of services.
Types of automobile insurance for commercial entities
#1. Commercial Auto Physical Damage
The collisions that the insured driver is going to encounter when crashes occur are included in the coverage listed in this automobile insurance type.
All the miscellaneous coverage and other related damage that may likely happen to the car itself are being covered here.
#2. Commercial Automobile Liability
This is the aspect where your insurance policy covers the bodily injuries, property damages, medical payments for those that may sustain injuries, and damages to the vehicle itself.
Automobile Insurance FAQs
What do you mean by automobile insurance?
Automobile insurance is also known as motor insurance and it is the type of insurance that covers the losses or damages that will happen to your vehicle, be it a private or commercial vehicle.
The goal of getting an auto insurance policy as an individual is to help prevent the monetary expenses that will arise when accidents or other uncertainties occur.
What are the 3 types of auto insurance?
Automobile insurance (auto insurance) has three (3) major types which individuals can purchase depending on what they need the insurance company to cover for them.
These three types of auto insurance are:
- Liability insurance
- Comprehensive insurance
- Collision insurance
Besides these three major types of automobile insurance, drivers can still purchase other insurance coverage’s such as personal injury protection, uninsured motorist or underinsured motorist, etc. although they are not available in all the states in the United States of America.
What is the main purpose of automobile insurance?
The goal of automobile insurance is to protect the insured individual against any form of financial loss which may occur from an accident event, life calamities, theft, etc.
Why do I need auto insurance?
The reason why everyone that resides in the U.S needs auto insurance is to ensure that his auto insurance company will be responsible for any damage to his car, motorcycle, etc.
We all know that life is unpredictable, it is advisable to get insured upon purchasing your new car to prevent unnecessary harm or damages to your car.
Does full coverage cover drivers not on policy?
In the United States, most of the full auto insurance coverage covers the car that was insured, not just the driver alone.
This means that even if someone that is not under any insurance policy collected your car from your insured car, your auto insurance company will still take care of any expenses, be it hospital bills from injuries, repairs from car crashes, etc.
Do all cars need insurance?
According to California law, every car owner must present financial responsibility for all his cars, motorcycles, boats, etc. this is to ensure that even if your vehicle causes injury or other damages to people’s properties.
Meanwhile, if you don’t have auto insurance that covers your vehicle, the state government will find you or they can even suspend your driving license.
Can my son drive my car if he is not insured?
For this case, using California as an example, from the state law, it’s an illegal action to drive a car without having car insurance for that particular car.
So if you reside in California, when purchasing a car, also budget the car insurance policy that you’re going to purchase as well.
Relating to the question in the title, if your son drives your insured car and have an accident, your insurance company will first deduct what they covered in the auto insurance policy they gave to you, then if the bills that were accumulated due to that accident is high the car owner will pay it up.
Can you drive someone else’s car?
When it comes to automobile insurance, you can drive someone else’s car even if the car you’re driving is not insured by any insurance policy.
The only side effect is that if you have an accident with an uninsured car, you and the owner of the car will take care of every expense that the accident incident caused.
Moreover, there is no limit on the number of persons that are allowed to drive your car. This applies to all the states in the U.S.
What happens if someone hits you and you don’t have insurance?
In this case, we have to trace who is at fault! If the uninsured driver is at fault, he will pay all the bills (including car damages and bodily injuries) that emerged because of that accident.
That you’re not insured is a big risk on your side because no insurance company will pay your bills.
Conclusion
Automobile insurance is the type of insurance that covers both you and your automobiles.
If you purchased automobile insurance for your cars, motorcycles, etc. when damages happen to your insured properties, your auto insurance company will take care of it.
We recommend individuals who reside in the U.S purchase an automobile insurance policy for personal or commercial use.
