Automobile Insurance – How it Works and What it Covers

Automobile insurance is a strict contract that’s between you and an insurance company of your choice. You agree to the company’s policy and pay premiums in exchange for protection against any financial losses. These losses could happen as a result of an accident or any major damage to the vehicle.

Automobile Insurance - How it Works and What it Covers
Auto insurance with car key and calculator

Furthermore, purchasing automobile insurance is a great deal as this helps you financially in any future case of an accident. The insurance company plays a big role in determining that all your losses are paid for. Most importantly, it is quite mandatory to get automobile insurance as required by laws in your state. Failure to do so could result in the suspension of your license, jail time, or fines.

How Does Automobile Insurance Work?

A deal between you and the insurance company is to pay for premiums. Now when you pay the premiums, the insurance company will agree to pay your losses. All these will be outlined in your policy.

All the policies are all priced individually and it allows you to customize the coverage amounts. The customization of the coverage amounts is great and this works well to suit your budget and your needs. In addition, the policy terms all have a time frame of six to twelve months and they are renewable. Also, the insurer will always notify the customer when it is time to renew the policy.

 In most states, the mandating car owners often carry medical payments or Personal injury protection. These forms will reimburse the medical expenses for any injury that has been sustained by either you or your passenger.

Who Does The Automobile Insurance Coverage Protect?

An automobile insurance policy will most definitely cover you and all other family members that are on the policy. This will also cover you all whether you are driving your own car or you drive someone else’s with their permission.

What’s more, your own policy can provide coverage to another person who isn’t on your policy. But, the person is driving your car with your consent.

In other cases, personal auto insurance will only cover personal driving. The policy will not provide coverage if you used your car for commercial purposes, for instance, doing deliveries.

Also, automobile insurance will not provide coverage if you happen to use your car for ride-sharing services. If you use your car to do Lyft or Uber business, the policy won’t cover those losses.

Automobile Insurance Costs

When it comes to the costs that are associated with buying car insurance: Deductibles and premiums. In addition to this, the cost of an auto insurance premium varies and depends on various factors. These costs depending factors including gender, age, years of driving experience, accident and moving violation history, etc.

However, in most states, they decree a minimum amount of automobile insurance. The minimum amount varies by state, but most people do buy additional insurance. The additional insurance is to protect themselves even more along with the standard policy. 

What Are The Types Of Automobile Insurance?

There are many legally mandated automobile insurance around that are proficient in covering the damages that happen to your car. However, it doesn’t really cover damages to your car. Here are some coverages that are optional:


Collision insurance will reimburse you for any ultimate damage that happens as a collision with another car. Even if your car collides with some object like a guardrail or a tree, this insurance will provide coverage. Also, the compensation will be released only if you are at fault.

Glass Coverage

This type of policy coverage will provide coverage for windshield damage and which is a common accident. Moreso, there are some automobile policies that include no-deductible glass coverage as part of their policy. These include rear windows, side windows, and glass sunroofs. This is a type of insurance coverage you want to go for depending on the model of your car.


This insurance provides coverage against theft and other damage that may be caused by an incident rather than a shock. Also, you can even purchase supplemental glass coverage.

Automobile Insurance Companies

These are some of the top-rated automobile insurance companies that you can work with based on this subject:

  • State Farm
  • USAA
  • Nationwide
  • Geico
  • Farmers
  • Allstate
  • Progressive

You can do more research on them to get more information required to get automobile insurance.