Car accidents happen anytime and anywhere. Even if you are the most careful driver, you can find yourself involved in this accident. But, you don’t need to worry because auto insurance will be your safety net.

But, what is Auto Insurance?

Auto insurance refers to an agreement made between an insurance company and an insured person or group. The person or group who were insured pay the insurance premiums to the insurance company and the company in return will pay in the event of loss of accident. Auto insurance in particular, is an insurance bought for trucks, motorcycle, cars and other road vehicles.

One type of auto insurance is the auto collision coverage insurance. It is not required by the law but once you lease the vehicle or purchase it, the lien holder will require it. It has a coverage limit, but the amount can be lowered or increased based on the request of the insurance policy holder. You must also remember that there is a deductible under the collision policy and must be paid before the start of the insurance coverage.

Another type of auto insurance is the comprehensive coverage. It is an insurance coverage for vehicle damage or loss of vehicle including theft, damaged caused by the weather or vandalized. It is also an insurance that is not covered by the law but required by the lien holder. Like collision coverage, it also has a deductible and coverage limit.

The third type of auto insurance is the liability coverage. It is an insurance required by law and it covers the damages brought about by the insurance policy holder or another party. Liability coverage has two aspects, first is the physical injury that pays for lost wages and medical bills. While, the property damage pays for the replacement of repair of objects that were damaged by the insured party. It also requires a coverage limit but it has no deductible.

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The last type of auto insurance coverage is the underinsured and uninsured motorist coverage. It protects the driver and the passenger if the insured person was injured by a driver who is not insured. It will pay for the medical bills and expenses up to the limit of your coverage.

In the world of auto insurance industry, it is also important to be familiar with the terms premium and deductible. An insurance premium is defined as the amount of money that you will be paying your insurance company based on a certain insurance policy. On the other hand, deductible, also known as an excess payment, is the amount that you pay when damages happen as a result of accident.

The basis of auto insurance premium charge is either determined by the insurance company of mandated by the government. If it is not mandated by the government, the insurance premium is being calculated based on actuary. Auto insurance premiums vary on several factors including the coverage selected, the characteristics of the vehicle, and the usage of the car as well as the driver’s profile. Accidents do happen, so it is necessary to be prepared by properly insuring your vehicle.