What is Automobile Insurance

What is automobile insurance? This is less to most people than it sounds
because there can be a number of different types of contingent risks identified in an
automobile insurance policy. To start with, let’s start out with the most
basic form of automobile coverage or protection. It is liability insurance. This is when you identify an insured vehicle
’96 or in some cases, group policies where the same policy covers multiple vehicles but
you have an insured vehicle and in the event the operation of this vehicle causes harm
to a third party — a motorist, a pedestrian, etcetera, to its normal operation, then liability
coverage will pay or hold the insured harmless or indemnify the cost they incurred if that
vehicle causes damage or harm to third parties. In the event an insured is operating the vehicle
or some individual is given permission to operate that vehicle, a third party and that
vehicle caused harm to another motorist and that motorist suffers damage to their vehicle
and medical bills, the liability coverage under that policy is what is going to pay
towards that third party within policy limits. Limits will be laid out as total amount per
incident or total amount per individual and it can sometimes separate out as to what it
will pay towards property damage versus pain and suffering or medical bills under the policy. So, that’s liability coverage. Collision, as it’2s so called, covers damages
to the automobile itself. In the event, a vehicle that is insured suffers
damages dented fenders all the way up until total loss of the vehicle collision will pay
towards repairing or replacing that property. It’s more of a personal property insurance
coverage under again, generally under the same policy as you have liability coverage. Collision is normally not required unless
it’s required by your noteholder, your lender on the vehicle who wants to make sure that
they remain secured, that they retain the security interest in the vehicle to ensure
payment by the individual to whom they lend money to purchase the vehicle. That is collision. You hear comprehensive policies, isn’t it? These are policies that cover multiple forms
or types of risks under the automobile policy liability, collision, could be coverages like
road hazard, theft, mechanical malfunction of the vehicle, etcetera so, a comprehensive
policy as the name implies, it’s going to be comprehensive. It’s going to be broader in its coverage. Uninsured or underinsured motorist coverage. Most states require this to a certain extent
but what it does is, in the event the insured vehicle is damaged in some way and it is the
fault of the third party but that third party is not able to be identified, either they
run from the scene of the accident or they are uninsured themselves so they cannot pay
the costs associated with making any repairs or indemnifying the individual for the losses
incurred because of their conduct, the uninsured underinsured coverage will pay the insurance
costs, the costs of damages suffered as a result of the third party’s action. So, again this is uninsured underinsured motorist
coverage. There may be any form of other special coverages
that you want to get under an automobile coverage policy specifically covering a contingent
risk. So the policies can be scoped very broadly
but these are the basic coverages that you’ll find under an automobile policy. http://thebusinessprofessor.com/what-is-an-insurable-interest/

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