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Automobile Insurance

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Automobile Insurance

Guide question: Understand the nature and need for automobile insurance, the types of automobile coverage and a review of the computation of auto insurance cost

Automobiles require a hefty investment and operating one involves a lot of risk. The risk here is amplified because there are several factors that are involved such as the automobile’s driver, his or her passengers, the automobile itself and the parts that compose it, and even external factors such as other automobiles, people, and natural disasters. Though car accidents do not happen often (carinsurance.com says that you will file for insurance once every 17.9 years), the investment that you put into an automobile is a hefty one ($31,252 on average in August 2014, according to TrueCar.com) that is only rivaled in the common man’s world by the cost of real estate. Automobile insurance is just like any other insurance plan wherein customers pay small amounts in fixed intervals to an insurance company who in return will pay for the expenses incurred by the policy-holder due to an automobile-related accident. Of course, these automobile insurance policies have maximum liabilities, depending on how much a customer is willing to pay during the intervals set.

There are four common types of automobile insurance namely liability insurance, collision coverage, comprehensive coverage, and personal injury protection.

Liability insurance is a common one because it covers car accidents that are caused by the actions of the policy holder. There are two types of third-party liability policies : bodily injury and property damage . * Bodily injury liability pays other people for damages the policy owner has done to them, such as medical expenses , lost wages , and pain and suffering; * Property damage pays other people for damages done to their property.
Collision coverage, on the

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