Automobile Insurance

What Does Automobile Insurance Mean?

Automobile insurance is a contract between a vehicle owner and an insurance company that transfers the risks associated with owning and operating a car to the insurer. Instead of bearing these costs themselves, policyholders pay a premium to have most or all of these expenses covered.

Insuranceopedia Explains Automobile Insurance

In most states, purchasing automobile insurance is mandatory. The exact coverage limits drivers have to carry vary by state, so it’s worth checking the minimum car insurance requirements by state to see what applies where you live. The premium is determined by factors such as the vehicle owner’s driving record, gender, age, the type of car, and the level of coverage desired. Because of these variables, the price two drivers pay for similar policies can differ by hundreds of dollars a year, which is why it pays to compare quotes and look at how much car insurance typically costs before settling on a policy. Automobile insurance policies typically include comprehensive coverage, which protects against damages caused by events other than a collision; liability coverage, which covers bodily injury and property damage; towing and labor; and collision coverage.