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Introduction To Insurance
Insurance is the guarantee of an individual being protected financially from losses caused by a number of different life events. Clients of an insurance company pay into a policy, and that money is later used to cover most (and in some cases, all) of the finances needed to pay for an unforeseen event. Insurance is used for a variety of reasons: for homes, businesses, healthcare and death, and even for pets and travel. Today we’re going to take a closer look at one of the more popular forms of insurance: automobile insurance.
What Is Auto Insurance?
Auto insurance is also known as car insurance or vehicle insurance, and just about every country in the world requires its drivers to be insured specifically when operating a motor vehicle. Car insurance companies offer you financial protection or compensation in the event that you’re involved in a car accident or if your car has been stolen. The insurance company agrees to pay for the damages/loss because you’ve made a prior agreement to pay a monthly/semiannual/annual premium. Insurance policies differ, but the majority of them typically cover:
- Property damage to your car, or theft of your car.
- The financial cost to cover any injuries that require medical attention.
- The legal responsibilities of the driver are to cover injury and/or property damage.
Why Is Car Insurance Necessary?
As mentioned above, car insurance is necessary because it covers financial losses when it comes to property (including vehicle) damage, bodily injury, and possible medical costs when it comes to an automobile accident. If you’re involved in a car accident, the last thing you’ll want to do is figure out how you’re going to pay for the damages to your vehicle or any possible medical bills due to an injury. The most common injuries caused by car accidents are soft tissue injuries such as connective tissue damage to the muscles, ligaments, or tendons. Head and neck are also injured in maximum cases.
Where Is Vehicle Insurance Required?
According to the International Driving Authority (I.D.A.), vehicle insurance was only required by 45 out of 50 U.S. states, but as of 2021, only two U.S. states do not require car insurance (Virginia and New Hampshire). The majority of, if not all, European and Asian countries require their drivers to have auto insurance. Less than half of drivers have car insurance in the country of South Africa, while it is mandatory for all the citizens of Nigeria in West Africa. Auto insurance is also required for all citizens of Australia.
If you’re a U.S. citizen traveling to another country and you plan on driving while you’re there, your U.S.-based auto insurance may not cover you in a foreign country. U.S. travelers typically have to contact the U.S. Embassy in that particular country to avoid any punishments that come with not having valid insurance.
How Much Does Car Insurance Cost, And How Do You Get The Best Rates?
Vehicle insurance costs differ from company to company, so it’s necessary to check around to see where to get the best rates. Typically, sports cars, luxury cars, and electric cars see higher premiums paid by the owner, but this can also differ based on where the individual lives and whether or not they’re seen as a bigger risk to the insurance company. Other factors that determine how much an individual could pay for car insurance include:
- Age: Younger drivers are considered a higher risk, simply because they’re inexperienced and don’t have the same number of years behind the wheel as most older drivers.
- Credit Score: To car insurance companies, a higher credit score indicates that you’re a responsible person, therefore a responsible driver.
- Driving Record: A clean driving record also indicates that you’re responsible, and you’ll see lower insurance premiums.
- Gender: Statistics have shown that men are involved in more serious car accidents than women, so men tend to pay higher premiums.
Just like health insurance, life insurance, and home insurance are all necessary, so is car insurance. It saves you from having to come out of pocket for automobile accidents when can easily cost thousands of dollars.