According to CarInsurance.com’s Premium Index (CPI ), the average automobile premium in the United States is $1,837. Many factors determine the price someone pays for auto insurance such as: driving record, miles driven each year, zip code, age, the policy holder’s car, and the amount of coverage needed.
People with clean driving records pay lower premiums than those who have had serious accidents or traffic violations. Also, those who have not had coverage for a number of years may have to pay more.
The more miles a driver commutes, the greater the risk for getting into an accident. Consequently, drivers who drive more than 10,000 miles a year pay more than drivers who do not.
An insured person’s address or zip code can affect premium costs. Insurance companies use statistical data concerning thefts, accidents, car repair cost, medical treatment costs, and lawsuits to help determine premium amounts.
When insurers calculate premium costs, they also consider age. Statistically, older, more experienced drivers have fewer accidents than younger, less experienced drivers. As a result, insurance companies charge teenagers and young adults under 25 more. The highest premiums are charged to males under 25. Married young adults tend to pay slightly lower premiums.
Additionally, when determining premium costs, insurance companies consider the type of car the policy holder wishes to insure: its value, repair costs, safety record, and its popularity among thieves.
Regardless of its costs, if you own a vehicle, having permanent general auto insurance is imperative. Forty-eight states and the District of Columbia have laws mandating automobile owners to insure their vehicles. Though, New Hampshire and Wisconsin do not require drivers to carry direct general auto insurance, they do require drivers to prove that they have enough assets to pay for damages in the event an accident occurs.
If an accident occurs, general auto insurance protects car owners from damages, liability, and possible court litigations.
Several types of american general auto liability insurance policies exist. Each policy is designed to meet the needs of the various types of cars and drivers. Since state requirements are different, some states require more coverage than others. Further, a few states have “No Fault” laws requiring insurance companies to pay for certain accidents regardless of fault.
Although state laws governing general casualty auto insurance vary from state-to-state, it is important for consumers to understand general automobile insurance basics. A basic policy provides six types of coverage: bodily injury liability, property damage liability, medical payments or personal injury protection (PIP), collision, comprehensive, and uninsured motorist coverage.
Liability Insurance
Automobile liability insurance, the most basic coverage offered, protects those insured if they are at fault in an accident. It pays for property damage and medical injuries to the other driver. Under some circumstances, it pays for the other driver’s legal bills and for pain and suffering. Liability does not cover the policy holder’s vehicle, or other personal property. Most states require drivers to carry liability insurance.
Liability insurance covers the policy holder, their spouses, children, relatives, and anyone else who drives the car with the policy holder’s permission. It covers listed vehicles, and (in most cases) it covers non-listed vehicles if the insured person is driving at the time an accident occurs. Rental cars that do not replace a listed vehicle while it is repaired may not be covered unless the policy holder pays a special premium.
Liability is comprised of bodily injury, medical payments or personal protection payments (PIP), and property damage. When the insured or a designated driver causes injuries to someone else, bodily injury liability covers the other person’s injuries. It also covers when the insured and other family members listed on the policy drive someone else’s car.
If an accident requires medical treatment, PIP coverage pays for the treatment of injuries to the driver and passengers of the policy holder’s car. Property damage liability pays for property damaged as a result of an accident. It includes damage to someone else’s car as well as damage to fences, buildings, lamp posts and telephone poles.
All states require drivers to purchase a minimum amount of liability coverage. A series of three numbers represent the minimum amounts. The first number represents the amount of money an insurer is obligated to pay for bodily injury for a person injured in an accident. The second number represents the total amount an insurance company is required to pay for all injuries in an accident. The third number represents the amount the company must pay for property damage.
For example, Alaska has the highest liability limits in the nation. The numbers 50/100/25 represent Alaska’s limits. Insured drivers in Alaska must carry a minimum of $50,000 of medical coverage for a single person injured in an accident, $100,000 of medical coverage for all people injured in an accident, and 25,000 of coverage for property damage. Insurance companies may not sell policies below a state’s minimum requirements.
Collision and Comprehensive Coverage
It does not matter if an accident is the insured driver’s fault or another driver’s fault, collision coverage insures drivers for damage done to their vehicles as a result of colliding with another car or object, driving into a pothole, or as a result of turning over. Collision is the most expensive coverage which requires deductibles (ranging from $250.00-$1,000) to be met, the higher the deductible the lower the premium. Consequently, insurers will subtract the cost of the deductible then reimburse policy owners for the cost of the repairs done to their cars.
Comprehensive
Comprehensive coverage pays for losses or damages due to theft, fire, falling objects, acts of nature, vandalism, or contact with animals.
Uninsured Motorist Coverage
Uninsured motorist and underinsured motorist coverage reimburse the policy holder if an uninsured or underinsured motorist hits the policy holder, designated drivers, and passengers; it also covers hit-and-run accidents. Several states require uninsured motorist coverage as a part of the insured’s liability coverage. In general, uninsured and underinsured motorist insurance cover medical expenses; subsequently, unless additional premiums are paid, they do not cover vehicle or property damage.
Finally, for additional premium charges, insurance companies offer coverage for rental reimbursement, towing and labor, and gap coverage.
- Direct General Auto Insurance
- Full Coverage Car Insurance
- What Does Auto Insurance Cover?
- What is Commercial Auto Insurance?
- What is Considered Full Coverage Auto Insurance?
