What is Car Insurance? Auto insurance is compulsory in all but three states in the United States, those being in Virginia -- where you can pay an annual $500 fee instead of car insurance (which would be more expensive sometimes) -- while New Hampshire and Mississippi offer the option of getting cash bonds. And yes sometimes people don't think compulsory insurance is a good idea but more on that later. If anything, the trend is toward stricter auto insurance compliance laws.
In fact, while the laws vary from state to state, you're looking at various penalties if you're caught driving without insurance. These penalties range from simple fines to a temporary suspension of your driver's license. If you're wondering how you get to work and pay the fine with your driving license suspended it should be noted, from experience, that nobody cares. What American Auto Insurance Policies Are Designed to Do The laudable goal of compulsory insurance is that, in theory, the more people that pay into the pool the cheaper your insurance, from an auto insurance company costs. Your premium usually depends on things like age and gender (teenage auto insurance rates are very high because teens get into many auto accidents), accident history, type of car and the kind of insurance you want to get. The largest auto insurers in the US include State Farm, Liberty Mutual Insurance, Allstate and Berkshire Hathaway, owned by world's second (or third depending on how that guy from Mexico is doing) richest man Warren Buffett, and which also goes by the name of GEICO. There are many kinds of auto insurance that you can purchase. Your rate also depends on the minimum state limits injury, death and for damage to property. Some states require more minimum coverage than others. The different kinds of insurance you can get include:
Collision: This coverage provides coverage for vehicles that are financed on credit through a bank or credit union and usually means a deductible. The coverage is meant to repair the vehicle if damaged or to provide a cash payment in case the vehicle is totaled. Comprehensive: This kind of insurance covers accidents that cars are in that don't involve collisions. For example, this is the kind of insurance you need when your car is involved in a fire, attempted theft, vandalism or impacts with animals. Full Coverage Comprehensive: This is usually the term that's used to combine comprehensive and collision coverages. This often isn't the same thing as full coverage as many other kinds of coverages have to be purchased in addition so as always with car insurance contracts read the fine print carefully. And try to get some help online or from a professional when you inevitably run across terms you don't understand. Uninsured or underinsured motorist coverage: This provides coverage when an at fault party doesn't have insurance, or doesn't have enough insurance so that in effect the insurance company pays the bills. This is sometimes a more significant problem during a recession as more people can't afford to pay for their insurance premiums. This is the problem with compulsory auto insurance in that it sometimes limits the ability of poor people to own and maintain cars. Loss of Use: This is the kind of insurance you get that provides reimbursement so that you can get a rental vehicle while your insured vehicle is being repaired due to a covered loss. You can also get insurance that covers towing and personal property. Shop Around Online for the Best Pricing Now that you know about the different kinds of insurance coverage for vehicles, you can do a better job of shopping around for the best kinds of insurance. Unfortunately, if you get the cheapest kind of insurance you might not be covered too well. Liability just doesn't cover very much and of course if you're at fault your coverage might not go into effect anyway.
But you can shop around online for the best deal. Just about all of the major auto insurance companies have widgets on their sites that allows you to figure out what your costs are. Some companies, like Progressive, as Flo has told you about 8 million times, will not only give you their prices but the rates of three or four competitors. But always be careful to read the fine print on what that the lowest pricing offers. For example, if your car has been stolen several times, then maybe you should invest in comprehensive and not just rely on liability.