• The Hammonton Gazette

The basics of auto insurance


Motorists can explore their options to find policies that fit their needs and budgets. (Courtesy Photo)

Traffic laws are designed to keep everyone on the road as safe as possible. That motivation also is behind laws governing auto insurance, which is required in Canada and the vast majority of American states.


What is auto insurance?


Auto insurance is something that most drivers have but very few, if any, hope to use. According to Insure.com, car insurance is an agreement between the policy holder and an insurance company which protects the individual against financial loss if the vehicle is stolen or involved in an accident.The Insurance Information Institute says auto insurance provides property, liability and medical coverage. Property coverage covers damage or replacement of the vehicle. Liability coverage is for the policy holder’s legal responsibility to others for bodily injury or property damage. Medical coverage pays for the cost of treating injuries, rehabilitation and sometimes even funeral expenses or lost wages.


Compulsory vs. mandatory coverage


Depending on where a policy holder lives, there are certain coverages that are compulsory, or mandatory coverages that are the minimum amounts required by law. Optional coverages also can be purchased to suit one’s needs. Compulsory coverage may vary based on location, driver’s age, type of vehicle and type of financing on that vehicle. It is best to discuss coverages with an automotive insurance agent to figure out which types of coverage will be needed and to get a price quote. The six basic kinds of coverage include:


• bodily injury liability


• personal injury protection


• property damage liability


• collision


• comprehensive


• uninsured and underinsured motorist coverage


Premiums vary


Insurance typically is sold with deductibles, according to the III. Policy holders may opt for higher deductibles so they can lower their premium costs. Additional factors that will affect the cost of coverage include driver’s age, driving record and location where the vehicle is housed or used. Credit score and gender also may affect premiums. Defensive driving courses and protecting the vehicle with anti-theft devices may help lower premiums.


Auto insurance costs vary by a significant amount, so it is a good idea to shop around and compare quotes. Bundling of auto insurance with other policies, such as homeowners insurance or umbrella policies, may help reduce rates.


Getting insurance


To obtain an insurance policy, the agent will need the year, make and model of the vehicle being insured. For the most accurate price quote, the VIN number will be needed.


To buy auto insurance, one needs to be the registered owner of the car. Some states allow dependent and independent drivers to own a car in their own names at age 16 or 17. Some parents opt to combine insurance coverage for their teenagers because the premiums may be cheaper. Teenagers tend to be riskier in the eyes of insurance companies due to their lack of experience and perceived recklessness. Those factors are reflected in premium costs.


Insurance is something every driver should have.