Auto insurance, also called as vehicle insurance, car insurance or motor insurance is purchased for cars and trucks. The primary aim of such insurance is to protect against the losses incurred due to an accident. Auto insurance may also cover third parties under liability protection where damage is caused to any property or person due to the accident.

• The terms and conditions of the policy may vary from one country to another and auto insurance is compulsory in many developed countries. In the United States auto insurance auto insurance covering liability for injuries caused to others property or person is compulsory in most states. As a safeguard, a driver or a car owner needs to have at least third party insurance in case he or she does damage to someone’s property or person.
• Vehicle insurance usually covers the insured party, the insured vehicle, third parties, third party fire and theft and passengers in the insured party’s vehicle. Just as in any other insurance, there is a deductible that is to be paid first by the policyholder before anything is shelled out by the insurance company. The deductible is usually inversely proportional to the amount of premiums.
• If you are confident enough that there is very little chance of an accident then you can choose a high deductible. The deductible is only payable if you meet with an accident and increased amount of deductible means lower premiums. This can reduce the cost of insurance in the long term. People who have good driving records can certainly increase their deductibles so that they don’t have to shell out more in the form of premiums.
• A deductible is also called an excess and a certain fixed amount is compulsory which is called the compulsory excess. However a person can choose to increase the deductible in which case it is called voluntary excess or voluntary deductible. It is advisable to keep the deductible low if you are new to driving since the chances of an accident are much higher in the first two years of learning to drive.
• The amount of premiums that is charged depends on many factors such as age, gender, and vehicle classification. A sports utility vehicle will have larger premiums compared to a Cadillac. Females usually have to shell out less since the average number of miles driven by females in any set period is lesser than that of males. Older people are more cautious and meet with lesser accidents.
• In the United States it is compulsory to carry liability coverage in some states. Further more liability coverage does not cover the driver if he or she is using some one else’s vehicle. For such cases an additional policy is available where the driver is protected in any vehicle that he or she drives.
• Collision coverage is offered in case the car meets with an accident and covers for repairs or the cash value of the vehicle if completely damaged. Some car loan providers make it mandatory for the applicant to have collision coverage at least till the loan is fully paid off. This ensures that the lenders do not get into financial trouble due to an accident and also protects the driver at the same time.
• Underinsured coverage is also offered in the United States where one out of three drivers does not have vehicle or car insurance. This means that in such types of coverage, the insurance company provides cover to at-fault party who is either not insured or underinsured. Such cover is also offered under umbrella policies in the United States or can be bought separately.
• Some other types of coverage include comprehensive cover, loss of use cover, loan or lease payoff, and behavioral based insurance which is the latest innovation in the auto insurance industry. Loss of use provides cover if the vehicle becomes useless due to loss of use and lease pay off cover is where the insured is protected against the difference in the real worth of the car and the amount owed to the loan provider. This is because the real value of the car is often less than the amount owed to the lender.

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