Auto Insurance Basics: What Every Driver Should Know

Your car can play an essential role in helping you and your family navigate daily life. But while driving may be a regular part of your routine, you cannot afford to become complacent about the risks of owning and operating a motor vehicle. Accidents and other incidents involving your car can occur at any moment, potentially leading to expensive losses and costs for which you may not have budgeted. Understanding and retaining the right auto insurance can make all the difference.

How Does Auto Insurance Work?

Auto insurance policies act as contracts between you and your insurance provider. After making selections regarding the details of your coverage, you’ll be responsible for paying regular (e.g., monthly or annual) premiums. These payments retain you the right to file a claim against your policy for financial assistance following covered incidents. If approved, your carrier may issue a payout up to your coverage limits and minus your deductible, thus limiting out-of-pocket losses that might otherwise prove catastrophic.

What Does My Policy Cover?

Your auto insurance can often be customized to suit your needs, preferences, risk tolerance and budget. Still, while the contents and details of policies may vary, you may want to make sure you understand and include the following features:

• Bodily injury liability coverage

• Property damage liability coverage

• Collision coverage

• Comprehensive coverage

• Medical payments coverage

• Uninsured/underinsured motorist coverage

Is Coverage Required?

Many states legally require drivers to carry auto insurance for vehicles they operate on public roads. While exact mandates may vary, bodily injury and property damage liability coverage are generally required. Additionally, if you’ve purchased your car with the help of an auto loan, your lender may require you to carry additional coverage until you’ve paid off your vehicle.

How Are My Rates Determined?

Auto insurance premiums can vary significantly depending on your unique circumstances. In many cases, carriers may consider the following:

• Vehicle specifications (e.g., type, model and age)

• Location

• Driving records

• Previous insurance claims

• Policy details (e.g., types of coverage purchased, deductibles and limits)

We’re Here to Help

Contact Cashway Auto Insurance today to learn about coverage options or compare personalized quotes.

This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.