When you buy a car and possess a driving license, it is important for you to know about the basics of auto insurance companies for before you start driving your car it is mandatory upon you to get it insured. Not only is car insurance vital for your own financial security but it is a proof of how much of a socially responsible citizen you are and how much you care for the damages that can result due to your negligent driving. So which company best suits you and your family needs, fit in your budget and provides allowances and discounts for which you are eligible? All this can be known if you have a clear understanding of the basics of auto insurance companies.
Auto insurance companies provide coverage for injuries to oneself and others and damage to car and any other property such as building, wall, fence etc. the most basic form of insurance coverage that is mandated by most of the states is the bodily injury liability coverage. It pays for the bodily injuries that are caused to the driver and passengers of the other car. Property damage liability coverage pays for the loss to the other person’s belongings such as car if the accident occurs due to your negligent driving. Medical payments coverage pays for medical expenses of the driver and his family. Collision coverage is whereby the damage to your car is covered when it collides with some other car. Comprehensive coverage covers any loss that occurs due to reasons other than collision such as weather fire, theft or vandalism.
To know the basics of auto insurance companies you must understand what does the insurance policy contains. First and foremost it contains the declaration page which displays details of the policyholder, limits of liability of the policy, policy premium and deductibles and details of the vehicle, etc. next part of the insurance policy is the document that lays down base policy. This is an important part which describes the responsibilities of the insurance company as well as the policyholder. Lastly, endorsements are provisions that can make amendments to the basic policy. That is, on the basis of these endorsements the clauses can be added, deleted or limited to the original policy.
Auto insurance companies spend a great deal of time in arriving at the rates of the policies. It is a matter of grave concern to the company as this business involves a lot if risk from the company’s point of view. Factors such as your residence, the vehicle that you drive, driving history, family and spouse details, past claims, daily mileage etc all contribute in determining the rate of premium that is to be charged.
For a better knowledge of the basics of auto insurance companies, there are many websites and applications that give comprehensive comparison details of different companies. Apart from this, many states issue reports that give details as to how many consumer complaints have been lodged against different auto insurance companies. These reports are easily available at state insurance departments’s website.