Dissecting Through Auto-mobile Insurance.

What is automobile insurance?

Automobile insurance, basically is insurance that protects you in case you cause injury to others or cause damage to their property in a car accident. It will also offer protection in case your car is damaged in the accident or gets stolen. The protection one has is spelt out in the automobile insurance policy.

An automobile insurance policy is the contract between you and the insurance firm. You, the client, pay a specified amount (“premium”) to that insurance firm in exchange for a set of select coverages. Your policy therefore, sets forth whatever the insurance firm will or won’t cover.

What does automobile insurance cover?

At higher level, the auto insurance typically offers four basic coverages;

· Bodily injury liability coverage. This pays for damage in the form of bodily injuries to the driver and the passengers of the other car when you hold responsibility for an accident. It also offers coverage to offer defense in case you need to file for a car insurance claim.

· Property damage liability coverage. This pays for damage to other people’s property (e.g. their vehicle) when you’re responsible for the accident

· Medical payments coverage. This covers you, your household relatives and passengers for any medical expenses resulting from injuries you sustained in the accident. It also covers you as a pedestrians hit by a car.

· Comprehensive coverage. This pays for damage to your vehicle in case stolen or gets damaged by select causes other than collision, such as theft, fire hail or vandalism.

What should I consider when purchasing automobile insurance?

When purchasing the automobile insurance, ensure you find the coverage that appropriately fits your needs. Try thinking about you and your family’s circumstances, including your budget and your risk tolerance.

To help you evaluate your needs, we provided are a few simple questions:

❶ What is your household salary? What are your assets? How much in equity and savings do you have?

How old is your car and how much is it worth? Do you own your car outright or is it leased or financed? How much are you willing to pay out-of-pocket? Do you have health insurance? Do you have children that are of driving age?

What does an automobile insurance policy consist of?

An automobile policy generally consists of 3 main parts:

Declaration page. This page displays information specific to you and the policy. This usually includes the name of the policyholder, policy number, policy term, limits of liability, deductibles selected as well as the policy premium. Base Policy. This spells out the fundamental provisions of the automobile insurance coverage and the specific responsibilities of the firm insuring you. It also does set forth your responsibilities, including paying your premium and informing the insurance firm when you are involved in an accident. Endorsements. These alter the base policy, just as amendments alter contracts. Endorsements will add, limit, broaden or delete coverages or change the base policies by any other way.

Basis of premium charges.

Depending on the jurisdiction, the premium can either be government-mandated or determined by the insurance firm, in accordance with the framework of governing regulations set by the government. Often, the insurer has more freedom in setting the price on the physical damage coverages than on the mandatory liability coverages.

When the premium isn’t mandated by the government, it’s usually derived from calculations of an actuary, based on statistically obtained data. The premium will vary depending on different factors, which are believed to impact on the expected costs of future claims;

➤ The car characteristics.

➤ The coverage selected (limit, deductible, covered perils).

➤ The driver profile (gender, age, driving history).

➤ The car usage (commutes to work or doesn’t, predicted yearly distance driven)