Modern automobile insurance coverage has been around for more than 100 years and first became mandatory in Connecticut in 1925. However, most states did not require car owners to insure their vehicles until the mid-1950’s. Currently 48 states and the District of Columbia require proof of valid insurance to register and operate an automobile.
Car accidents are expensive. According to the most recent data, car crashes cost an estimated $871 million a year. Fatal accidents alone cost around $44.4 billion. Without the resources of insurance company lawyers and adjusters, uninsured individuals would no doubt have incurred much higher costs.
While most Americans understand that car insurance is important, most people aren’t sure how their insurance works. This auto insurance guide is here to teach you the fundamentals.
What is auto insurance?
The simplest explanation of auto insurance is that it agrees to pay all or part of the costs associated with an accident, theft or other cause of damage to your car. In exchange for this coverage, you pay an insurance premium to your provider.
The phrase “auto insurance” is a general term that refers to various types of insurance protection for cars. The Insurance Information Institute explains that an auto insurance policy can include up to 6 different types of coverage:
- Liability
- Collision
- Comprehensive
- Uninsured Motorist
- Underinsured Motorist
- Personal Injury Protection
To get auto insurance, you’ll need to provide some information about yourself and your vehicle. Expect to provide your age, marital status, state of residence, insurance claims history, the type of car your drive, how old it is and its safety features.
