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Questions & Answers

What is a Car Insurance Policy?

A car insurance policy is a legally binding contract, an agreement between a car insurance company and the person who buys the car insurance policy. This is called the insured or the policyholder. In exchange for a payment, called the premium, the insurance company agrees to pay for certain types of loss or damage as outlined by the insurance policy, the contract. Should a loss occur which meets all of the requirements described by the terms the insurance policy, the loss is said to be covered by that policy.

Why Do I Need Car Insurance?

Your Car is a valuable asset which could be very expensive to repair or replace if is damaged. Part of what car insurance does is to pay for the repair or replacement of a vehicle which is damaged either as a result of your driving or from other causes not related to driving, such as theft or storm damage. Without insurance, most people would be unable to replace vehicles that are stolen or become severely damaged.

How Does a Car Insurance Policy Protect Me?

Car insurance policies offer protection against economic loss. Car insurance will also cover your legal liability which could arise if you injure another person or damage another person's property with your vehicle. Depending on the extent of the damage or injury caused, the potential amount for which you could become liable is far in excess of the value of your automobile, perhaps in the hundreds of thousands of dollars or more. Liability car insurance pays for damage which you become liable, up to the dollar amount of liability coverage that you purchased. Without liability car insurance, all of your personal assets could be at risk. Car insurance could pay for your defense if you should happened to be sued.

Are There Any Limitations on What a Car Insurance Provider May Charge Me?

For each type of car insurance policy, insurance providers have a wide range of premium levels that may be charged, these are based on various factors that are considered when your application is submitted. You can read more in our information Center to find out about discounts that may be available to you, and what questions to ask to reduce your premium.

Why Do Insurance Companies Raise Rates for Less Than Perfect Driving?

Car insurance rates are based on and have been based on statistics and probabilities. Statistics show that the probability of a person getting into an accident increases with the number of traffic violations, less than perfect driving record. The increased probability of an accident raises the risk of loss to the insurance company, makes perfect sense right. The greater the risk, the higher the probability for loss, and therefore, the higher the insurance premium, rate will be.

For More Information About Car Insurance Visit our Information Center.

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