Car Insurance

By Anna Lynn C. Sibal

Car insurance, otherwise known as auto insurance or motor insurance, is a type of car insurance which protects a driver, the insured vehicle and third parties involved against possible liabilities that inevitably arise in case of vehicular accidents and mishaps. In most countries, it is illegal to drive on public roads without having proper car insurance for the vehicle.

Coverage for a car insurance policy is governed by different factors, which are always assessed by an insurer prior to granting the policy, and which also determines how much premium the insured party shall pay for on a regular basis. These factors are the kind of vehicle to be insured, the intended or the current usage of the vehicle, the age of the person to be insured, and the insured person’s driving history.

Car insurance policy providers have different rates for different car models. Also, if the car is not new, the distance the vehicle has already been driven in as well as the estimated distance the vehicle will be driven in on an annual basis factor into the computation of the premium. Intended usage is also a crucial factor; many car insurance policy providers are hesitant to cover rental cars, primarily because they are reluctant to answer for claims whose values are higher than the actual value of the insured car.

The person to be insured is also assessed by the car insurance policy provider in evaluating the application for a car insurance policy. People in their teens are charged higher premiums unless they undertake further training in driving school. On the other hand, cases of students being granted discounted premiums on car insurance because of high academic standing are not unheard of. Retirement discounts are also available for senior citizens.

Naturally, people who have figured in a number of vehicular accidents are asked to pay higher premiums. Moreover, people who are estimated to have short driving mileage every year on the average are often given premium discounts.

The liabilities covered by car insurance policies come in many forms. Some of these forms of liability coverage are:

Combined single limits. Combined single limits, as the name suggest, covers both the claims for the damaged vehicle and the claims for injuries of the insured driver or a third party.

Split limits. In split limits, coverage for damage to property or the insured vehicle is claimed under property damage coverage, while injuries to the driver or a third person is paid out under bodily injury coverage.

Collision. Collision takes care of the vehicle’s repair in case it is damaged in an accident. It also pays the cash value of the car if the car can no longer be repaired.

Comprehensive. Comprehensive covers for damages that are not results of an accident, such as incidences of fire, theft or vandalism.

Loss of use. Some car insurance policy providers agree to shoulder the expenses the insured person may incur for renting a vehicle if the insured car is put under repairs.