When you buy or lease a car, SUV, or truck it's important to protect your investment. Buying an auto insurance policy can offer reassurance in case you're involved in an accident, stolen, vandalized, or damaged by a natural disaster. Instead of paying out-of-pocket for an auto accident, people pay annual premiums to an insurance company that company then pays all or most of the costs associated with an auto accident or other damages that occurred to the vehicle.
THE STICKING POINTS
What Is Auto Insurance?
Auto insurance is effectively a contract between you and an insurance company in which you agree to pay premiums too in exchange for protection against financial losses caused from an accident or other damage to the vehicle. Auto insurance can offer coverage for:
The exact details of what's covered depend on the minimum coverage requirements for your state and any additional coverage options you opt to include. Most states require drivers to have a minimum amount of bodily injury liability coverage and property damage liability coverage.
Failing to obtain the minimum auto insurance required by the laws in your state could result in a suspension of your license, fines, or even jail time for repeat offenses.
Auto Insurance Costs
There are two primary costs associated with purchasing Auto insurance:
premiums and deductibles.
Auto insurance premiums vary depending on age, gender, driving experience, accident and moving violation history, and other factors. Most states mandate a minimum amount of auto insurance. That minimum does vary by state, but many people purchase additional insurance to protect themselves further.
A poor driving record or the desire for complete coverage will lead to higher premiums. However, you can reduce your premiums by agreeing to take on more risk, which means increasing your deductibles.
Your deductible is the amount you must pay when filing a claim before the insurance company will pay out anything to you for damages. For example, your policy may have a $100 or $500 deductible. Agreeing to a higher deductible can help lower your premium, but you have to be reasonably sure you could cover the higher amount if you ever need to file a claim.
How Auto Insurance Works
In exchange for paying your premium, the insurance company would agree to pay your losses as outlined in your policy. Policies are priced individually to allow you to customize coverage to suit your exact needs and budget. Policy terms are typically 6 or 12 month timeframes and are renewable. The insurance company will notify you when it’s time to renew the policy and pay another premium.
Uninsured Motorist insurance covers you when an accident is caused by a driver who does not have auto insurance. Underinsured motorist coverage is designed to protect you when you're involved in an accident with a driver who has some insurance but not enough to cover the full cost of the claim.
Note: Getting a car insurance policy above the minimum limits set by state law may increase the cost of coverage but it could benefit you later if you're involved in an accident.
Who Does Auto Insurance Coverage Protect?
An auto insurance policy will cover you and other family members on the policy, whether driving your car or someone else’s car (with their permission). Your policy also provides coverage to someone who is not on your policy and is driving your car with your consent.
Personal auto insurance only covers personal driving. It will not provide coverage if you use your vehicle for deliveries or any business related use. Personal auto insurance also will not provide coverage if you use your vehicle to work with ride-sharing services like Uber or Lyft. Some auto insurance companies now offer supplemental insurance products, for and added premium, that extends coverage for vehicles owner that work with ride-sharing services.
While other types of insurance such as health and homeowner's may seem more important, if you own an automobile, regardless of whether your state requires auto insurance, having an insurance policy can save you a lot of money and aggravation.
Always remember Harleysville Insurance Group will shop around on your behalf to get you the best price available.