Car insurance might be one of the most misunderstood types of insurance plans in America. People often confuse factors that determine prices when it comes to getting an insurance policy for their vehicles. Whatever the case is most states in America made it mandatory for car owners to have at least liability insurance for their vehicles.
In case you are wondering, liability insurance is a type of insurance plan that covers a client when he or she is found guilty of causing damages or injury to other people or their properties as the case may be. This kind of insurance plan does not cover property damages or injury sustained by the policyholder. it only covers the affected third party and failure to adhere to this law can lead to a driver’s license suspension, penalty fee and jail term in some cases.
Some states, though, do not mandate car owners to have auto insurance on their vehicles but provide other means to give somewhat of a risk protection plan for their car owners. In Virginia for example, an uninsured motor vehicle fee is paid to the government to substitute insurance. While in Mississippi and New Hampshire vehicle owners have the option to post bonds instead of getting an insurance plan. When people travel in their cars to states with different insurance laws from the state they got their insurance from, the privileges and immunities clause protects them from breaking that state’s law.
A lot of variables need to be put into consideration when trying to figure out the best automobile insurance for you. But before we get into that let us get a feel of how car insurance companies operate.
WHAT IS CAR INSURANCE?
Buying a car sometimes can be an expensive risk. You never can tell what might happen when we get on the road with other road users. Even in scenarios where the car bought is not that expensive we are still at risk of causing harm and property damage to other people. You never can tell how many dollars worth of damages one could incur from car accidents when the unexpected happens. This is where car insurance comes in handy.
Car insurance or auto insurance is a contract binding agreement between an individual or organization and an insurance company for the insurer to provide financial support when policyholders are involved in an accident or have suffered financially from other factors. Just like every other form of insurance, insurers will only bear the auto risk when the client pays Premium.
A VERY BRIEF HISTORY OF CAR INSURANCE IN THE USA
Years after Benjamin Franklin started the first insurance company, the Philadelphia Contributionship, to cater for customers who had suffered fire hazards on their properties, the need for other forms of insurance policies arose.
In 1898, Travelers Insurance was the first insurance company in the US to give out car insurance worth $12.25 (Premium) to Truman J. Martin a doctor from New York. Dr Truman will later benefit $5000 from the policy for liability coverage.
The state of Massachusetts, in 1925, was the first US state to mandate car owners to get car insurance as a requirement for vehicle registration. It took 30 years for other states to pass the same law.
Over the years many developments and experiences have led to the improvement of car insurance policies. You have to know exactly what your average insurance policies can cover for you in desperate times.
WHAT CAN YOUR AUTO INSURANCE PLAN COVER?
Here is a list of things your car insurance might cover financially depending on the kind of plan purchased.
- Damages to your car and the other person’s car involved in the accident.
- In the case of death, it can cover the funeral cost of the victim of a car accident.
- When injuries are sustained due to a car accident a car insurance policy might cover the medical bills of the victims.
- It can cover damages to property.
Car insurance policies are super important and necessary to get in the United States if you want to own a car. The good thing is, it’s not 1897 anymore, a lot of insurance companies now offer different car insurance plans to clients that need them, some at a competitive price and you can access them from your phones.
Factors that Affect the Price of Insurance Premium
Even though these companies have varying prices they all set their premium prices according to the following factors:
- Your car model: The car brand and the year of production can hike up or reduce the price of car insurance. A recent luxury car will definitely be more expensive to insure than an old regular sedan.
- How frequent you drive: If you drive less your accident risk will be less and vice versa. There are also hours believed to be more traffic-intensive, this is also a determinant price factor.
- Your location: This determines your premium price because people that live in places with lots of vehicular movement and high crime rates will definitely be charged a higher premium than those that stay in places with less traffic and crime.
- Your age: Research shows that younger inexperienced drivers are more likely to be involved in an accident so their premium will be higher than an older experienced driver.
- Marital status: Statistics show that people who are married are at lesser risks of being involved in an accident so their car insurance bills will be lesser than unmarried people who are more prone to car accidents.
- Gender: Young men have proven to be more prone to be involved in accidents.
- Your credit score: In some states, insurance companies give people with high credit scores a lesser premium than people with low credit ratings because data makes them believe that people with high credit scores are hardly involved in car accidents.
UNDERSTAND YOUR COVERAGE BEFORE GETTING YOUR POLICY
To understand what your insurance policy covers you have to know what type of policy plan you are paying for.
The following is a list of car insurance policies and what they cover.
This kind of car insurance covers the third party’s bills only.
- UNINSURED MOTORIST INSURANCE
Covers payment for damages caused by hit and run car drivers and uninsured motorists.
- UNDERINSURED MOTORIST INSURANCE
This protects the policyholders against third parties who have caused you damages during an accident but don’t have enough on their liability insurance to cover the bills.
Covers bills for theft and damages caused by other factors apart from a collision. This includes vandalism, natural disasters and animals. Also covers towing and labour insurance.
This covers bills for accidents caused by a collision.
- MEDICAL PAYMENTS COVERAGE
In the event where injuries were sustained during an accident, this covers the medical bills.
Should a car bought on loan be stolen or damaged, this type of insurance helps to complete the loan payment.
- RENTAL REIMBURSEMENT INSURANCE
This covers payment for any rentals made in order to transport a car away from an accident site.
This is a type of car insurance plan that covers classic cars only.
So whether you are new to the US automobile insurance world or you are an immigrant citizen, you should consider these factors when choosing your car insurance policy.
Car insurance might be one of the most misunderstood types of insurance plans in America. People often confuse factors that determine prices when it comes to getting an insurance policy for their vehicles. Whatever the case is most states in America made it mandatory for car owners to have at least liability insurance for their vehicles.
In case you are wondering, liability insurance is a type of insurance plan that covers a client when he or she is found guilty of causing damages or injury to other people or their properties as the case may be. This kind of insurance plan does not cover property damages or injury sustained by the policyholder. it only covers the affected third party and failure to adhere to this law can lead to a driver’s license suspension, penalty fee and jail term in some cases.
Some states, though, do not mandate car owners to have auto insurance on their vehicles but provide other means to give somewhat of a risk protection plan for their car owners. In Virginia for example, an uninsured motor vehicle fee is paid to the government to substitute insurance. While in Mississippi and New Hampshire vehicle owners have the option to post bonds instead of getting an insurance plan. When people travel in their cars to states with different insurance laws from the state they got their insurance from, the privileges and immunities clause protects them from breaking that state’s law.
A lot of variables need to be put into consideration when trying to figure out the best automobile insurance for you. But before we get into that let us get a feel of how car insurance companies operate.
WHAT IS CAR INSURANCE?
Buying a car sometimes can be an expensive risk. You never can tell what might happen when we get on the road with other road users. Even in scenarios where the car bought is not that expensive we are still at risk of causing harm and property damage to other people. You never can tell how many dollars worth of damages one could incur from car accidents when the unexpected happens. This is where car insurance comes in handy.
Car insurance or auto insurance is a contract binding agreement between an individual or organization and an insurance company for the insurer to provide financial support when policyholders are involved in an accident or have suffered financially from other factors. Just like every other form of insurance, insurers will only bear the auto risk when the client pays Premium.
A VERY BRIEF HISTORY OF CAR INSURANCE IN THE USA
Years after Benjamin Franklin started the first insurance company, the Philadelphia Contributionship, to cater for customers who had suffered fire hazards on their properties, the need for other forms of insurance policies arose.
In 1898, Travelers Insurance was the first insurance company in the US to give out car insurance worth $12.25 (Premium) to Truman J. Martin a doctor from New York. Dr Truman will later benefit $5000 from the policy for liability coverage.
The state of Massachusetts, in 1925, was the first US state to mandate car owners to get car insurance as a requirement for vehicle registration. It took 30 years for other states to pass the same law.
Over the years many developments and experiences have led to the improvement of car insurance policies. You have to know exactly what your average insurance policies can cover for you in desperate times.
WHAT CAN YOUR AUTO INSURANCE PLAN COVER?
Here is a list of things your car insurance might cover financially depending on the kind of plan purchased.
Car insurance policies are super important and necessary to get in the United States if you want to own a car. The good thing is, it’s not 1897 anymore, a lot of insurance companies now offer different car insurance plans to clients that need them, some at a competitive price and you can access them from your phones.
Factors that Affect the Price of Insurance Premium
Even though these companies have varying prices they all set their premium prices according to the following factors:
UNDERSTAND YOUR COVERAGE BEFORE GETTING YOUR POLICY
To understand what your insurance policy covers you have to know what type of policy plan you are paying for.
The following is a list of car insurance policies and what they cover.
This kind of car insurance covers the third party’s bills only.
Covers payment for damages caused by hit and run car drivers and uninsured motorists.
This protects the policyholders against third parties who have caused you damages during an accident but don’t have enough on their liability insurance to cover the bills.
Covers bills for theft and damages caused by other factors apart from a collision. This includes vandalism, natural disasters and animals. Also covers towing and labour insurance.
This covers bills for accidents caused by a collision.
In the event where injuries were sustained during an accident, this covers the medical bills.
Should a car bought on loan be stolen or damaged, this type of insurance helps to complete the loan payment.
This covers payment for any rentals made in order to transport a car away from an accident site.
This is a type of car insurance plan that covers classic cars only.
So whether you are new to the US automobile insurance world or you are an immigrant citizen, you should consider these factors when choosing your car insurance policy.