Automobile Insurance

Definition - What does Automobile Insurance mean?

Automobile insurance is a contract between a vehicle owner and an automobile insurance company that transfers the risk associated with owning and operating a car to the latter. Rather than paying for these costs themselves, policyholders pay a premium to have most or all of such expenses covered.

Insuranceopedia explains Automobile Insurance

It is compulsory to purchase automobile insurance in most states, and the premium depends on such factors as the vehicle owner's driving records, their gender and age, the kind of car, and the amount of desired coverage. Automobile insurance policies usually include comprehensive coverage, which covers damages caused by events other than a vehicle collision; liability coverage, which covers the bodily injury, damage to property; towing and labor; and collision coverage.

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