Car insurance is a financial protection provided through an agreement between an insurance funding company and vehicle owner who purchases the insurance policy in order to receive financial support during times of accident, damage or loss of the vehicle in order to avoid any type of financial loss or risks.
Insurance plans are necessary to protect family assets and properties and avoid any kind of loss of the same assets during times of crisis. It even provides legal assistance from any charges arising from an accident causing any permanent damage or injury even death.
Government has now made it mandatory for vehicle owners regardless if it is a commercial or a personal vehicle to have insurance assigned to the respective vehicles as they have recognized the useless loss of the family’s assets and other such important valuable items at the times of damage recovery as an unnecessary expense.
The insurance varies from vehicle size, the state where it is bought and operated and many other such details. The car owners pay an annual or semi-annual or quarterly premium charge or fee for the insurance in order to renew it periodically and cover the loss or damage suffered.
Car insurance can be classified into three categories:
- Liability coverage: where in the damage caused by an individual to others’ property is covered by the insurance policy to avoid suffering any kind of personal loss to pay for the damaged valuable property.
- Collision coverage: It helps cover the cost of repair of the damaged personal vehicle upon hitting that is colliding with any other vehicle and immovable or still object or any other hard material that causes heavy damage to the vehicle.
- Comprehensive coverage: The type of coverage provided on damage due to natural calamity like flood, hurricane or human activities like theft vandalism or at the collision with living beings is comprehensive coverage. Collision and Comprehensive go hand in hand like red on a rose. Most insurance companies sell them together.
How does car insurance work?
Now, nothing in the world is free. Your insurance company won’t just cover all your damages; after all, they are operating a business while saving people from expensive lawsuits. In the case of a covered loss, auto insurance protects the insured financially. When you buy auto insurance, you give the insurance provider a premium in return for the protection they offer.
You can file a claim with your insurance provider to ask them to pay for the damages if you are in an accident or your automobile is damaged in some other way. If your policy covers the claim, the insurance provider will examine it and pay for the damages up to the policy’s maximum.
