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 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. 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.