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The basics of auto insurance

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

What is auto insurance? Auto insurance is something which most drivers have, but very few, if any, hope to use it. According to, car insurance is an agreement between the policyholder 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 policyholder'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 policyholder lives, certain coverages are compulsory or mandatory coverages which 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. Policyholders may opt for higher deductibles so they can lower their premium costs. Additional factors that will affect the cost of coverage include the 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 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.

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. Motorists can explore their options to find policies that fit their needs and budgets.


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