Automobile insurance is required to operate most vehicles. It is required by law and is enforced by various government agencies. The concept of auto insurance is very simple and is similar to other types of insurances. However, there are several terms that are specific to the automobile insurance industry for example www.insurancehero.ca/ontario-auto-insurance/.
Need for Auto Insurance. Insurance is needed to offer protection from the damages resulting from an accident. The damages include injuries or death to humans, property damages and vehicle damages. A driver can purchase several types of insurances, in addition to the basic coverage required by law.
How Insurance Works. The insurance company collects premiums from the drivers. The pooled amount is used to settle claims made by few drivers. The insurance company splits the premium amount to pay government taxes, settle claims and make a profit. The premium is determined by various factors such as driving history, age, occupation, geographical location, driving habits and gender. It is important to remember that insurance pays only for the types of coverage specified in your contract with the insurance company.
Components of Auto Insurance
• Premium: The amount charged by the insurance company for the options selected by the driver.
• Deductible: The amount of expenses paid by the driver before the insurance will pay any expenses. Premiums are cheaper when the deductible is higher and vice-versa.
• Bodily Liability: This option covers cost of medical care, funeral expenses and death benefits.
• Property Damage Liability: This option covers damages to the vehicle and the resulting repairs and replacements needed. It also covers damages to third party vehicles and physical properties up to the limit specified in the contract.
• Collision Coverage: This option covers costs of repair and replacement when the vehicle is purchased with a loan.
• Comprehensive Coverage: This option protects the driver from losses due to flood, fire, vandalism and theft.
• Personal Injury or Uninsured Motorist Coverage: This option will protect you in case of a collision with an uninsured driver.
What Happens After an Accident? In the event of an accident, you will need to immediately notify law enforcement agencies and your insurance carrier. Your insurance agent will assess the damages, investigate the cause of accident and determine the source of liabilities. Your insurance company will be required to pay for all damages if you are at fault. Your insurance company will charge the other party’s insurance carrier, if it’s not your fault.