Essay Example on Car Insurance

The use of automobiles dates back to the First World War. Cars were relatively fast and dangerous yet still there wasnt any form of insurance. Injured victims seldom got any compensation in an event of an accident while drivers often faced considerable costs for damage to their cars and property. It therefore became necessary to introduce a scheme to ensure that all vehicle owners and drivers are insured for their liability for injuries caused or death to third parties. Car insurance provides protection against financial loss in case of an eventuality such as an accident. It may additionally offer financial protection against theft of the vehicle and possibly damage to the vehicle, sustained from other causes other than traffic collisions. A car insurance is essentially a firewall against economic catastrophe should a fault for property damage or injuries to other people occur.

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Car insurance is usually a contract between two parties: you and the insurance company. You agree to pay premiums and the insurance company agrees to compensate you against losses incurred as defined in the policy. Basically, car insurance provides property, liability and medical coverage. There exist myriad ways of purchasing the cover. First, the cover can be bought over the internet. It can also be purchased from different web sites. Before purchasing car insurance, it is imperative to consider several factors such as the kind of car, driving record and the premiums to be paid. Understanding the simple basics of auto insurance will make you confident of the car insurance policy you are selecting.

Some of the items covered by car insurance include trucks, cars, motorcycles, and other road vehicles. Depending on the jurisdiction, insurance premium can be facilitated by the government or determined by the insurance company. Premiums vary depending on myriad factors believed to have an impact on the expected cost of future claims. These factors include: car characteristics, coverage selected including deductible, (limit and covered perils), profile of the driver including the age, gender and driving history as well as the usage of the vehicle. Usually, teenage drivers with no driving record pay higher car insurance premiums.

Basically, many policies cover bodily injury liability to people who suffer injuries or death suffered by other people caused by the insured car. Nevertheless, car insurance also covers medical payments which cater for medical expenses of the injured driver and passengers in your car. Additionally, it extends to cover uninsured motorist coverage. The cover pays for your injuries caused by an uninsured driver or in some states a hit-and-run driver. Given the large number of uninsured motorists, this is essentially an imperative coverage to undertake. Lastly, car insurance also covers comprehensive physical damage coverage. This form of cover pays for losses resulting from incidents other than collisions. This form of cover renders protection against damage to your car if it stolen or damaged by floods, fire or animals.

In order to acquire a good insurance policy, it requires you to compare rates in order to discover the premium rates, compare them and in the end acquire the most favorable policy. Insurance companies use credit ratings of their policyholders in determining risks. Drivers with good credit scores get lower insurance premiums due to the perception that they are more financially stable, more responsible and have financial means of maintaining their vehicles. On the other hand, those with lower credit scores have their premiums raised or in other situations insurance is terminated automatically. Research has shown that good drivers with tarnished credit records are charged higher premiums whereas bad drivers with good credit records pay lower premiums.