How Car Insurance Policy Coverage Works?Last Revised on July 10, 2013
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Car insurance is insurance purchased for cars, or any other vehicles to primarily provide protection against losses. The main concept behind car insurance is that if you hit somebody in an accident and you don’t have any money during that time period, how you are going to pay for the liability payments you owe to the victims of that injury? This is why the government enforces you to carry a car insurance all the time you drive on the street. Here are the things that a full insurance policy usually covers: the insured party, the insured vehicle, the third parties (vehicles and their owners) injured in a crash with no fault on them, and third party, fire and theft type of damages to the car.
Well here is how the car insurance policy works in different parts of the United States. Even though the different states have requirements set up differently, most of them require the drivers carry an auto insurance that covers at the minimum a liability for any incurred human injury, car damage and financial consequences that could happen during an accident. Interesting thing is that some states consider liability insurance as simply a way for insurance companies to make money and not really helpful for common people in general. For example, the state of Virginia gives it drivers the option to pay an annual fee of $500 for each vehicles if they don’t want to buy any liability insurance, whereas the New Hampshire residents enjoy the benefits of the Ballpark Model where the drivers are not even required to purchase any insurance or pay some sort of liability fees annually.
However, in some other sates you can not even go to jail but also have your driving license and registration suspended or revoked for not carrying an auto insurance policy. Usually the insurance companies provide the insurance at 6 month length period and after which you have a choice to either renew or let go the policy.
What thing the car insurance companies look at when determining the price for your car insurance policy? Good question to ask. There are several factors they take into consideration, but the most important ones (and often the only ones) used in calculating your insurance quote are your age (older the safer driver and thus lower price), marital status (married means more financially stable to make the payments on time), purpose of the car (just for leisure, or business, which means more traveling and thus higher risk), driving history (new drivers are at higher risk for accident and thus pay higher premiums), odometer mileage (is your car old or new; new cars will pay higher premium if you are covering that car with self protection), and vehicle classification (luxury cars and high speed vehicles pay higher insurance premiums).
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