Insurance companies assume financial risk when providing coverage. In order to minimize the amount lost by the firm, underwriters assess a person’s background to determine eligibility for an insurance policy.These professionals, working for the insurance company, look at an individual’s proposed application and decide whether the request for insurance should be granted. Among other things, an applicant’s demographics, driving record, and credit history are factored into making the determination.The process undertaken to safeguard against risk is typically reflected in the amount of insurance for which a policyholder pays to the insurance company.New drivers or drivers with a less than perfect driving record are put into an “assigned risk” category, and insurance companies are required by law to insure a certain percentage of these drivers. As you can imagine, such drivers’ premiums are usually very high until the driver has established a history of safe driving.
As an added protection, consumers have a variety of coverage types they can purchase. The benefits to having multiple types of insurance coverage minimize the amount of exposure or personal liability to the policyholder. Listed below are a few types of quotes a person can get: Liability Insurance
Liability coverage is the most basic of all policies, with minimum requirements set by all states. This coverage protects the insured from being personally liable in the case when an accident was his or her fault. The liability portion of the policy will reimburse the injured party for repairs, damaged property, and medical care up to the limits stated in the policy. Should the expenses of the injured party exceed the amount stated in the policy, the insured would become personally responsible. This is why many policyholders increase the amount of liability insurance they have in order to protect their assets. In addition, liability insurance does not protect the insured. In the case of an accident or incident, this type of insurance alone will not cover the policyholder's expenses.
When giving vehicle insurance quotes, insurance typically includes the amount an insurance company will pay out for bodily injury (BI), total accident, and property damages incurred to the other party. Liability insurance is typically represented in the format 50/100/50, which means that a maximum of $50,000 would be paid to each person in the accident for bodily injury, with a maximum of $100,000 payable per accident. In the event that the insured damaged someone's property, such as a mailbox or house, a maximum coverage of $50,000 would be reimbursed. Bodily Injury Liability (BI)
The bodily injury liability portion of a policy states the maximum limits a company will reimburse per person and per incident. Typically an insurance policy cannot be purchased without these two components. States have established minimum insurance liability requirements for vehicles, but in many cases these amounts are insufficient should the driver cause an accident that involves multiple people, vehicles, or substantial injuries. In some cases, these limits are out of date and have not kept up with changes in the economy, and it is a lengthy process for a state to change its liability insurance requirements.
Take, for example, a state that requires a minimum liability policy of 10/20/10. This would mean that in the event of an accident where the insured was at fault, the maximum amount that would be paid would be $20,000 for the accident, with a limit of $10,000 per person. Clearly this would not be enough to cover all expenses in a case where severe damages were caused. Among other expenses, besides physical injury, coverage under this policy could apply to funeral expenses, legal fees, loss of compensation, and suffering. This is why many people opt to increase their insurance liability limits to an amount they can comfortably afford in exchange for protection in case of a serious accident.
Comprehensive vehicle insurance is considered the protection provided for any damages incurred, other than those caused by collision. Damages such as theft, fire, weather, flood, and contact with animals would be reimbursed to the insured or other injured parties under this policy. Although these events do not occur often, they can be devastating and costly. In the case of car theft, comprehensive coverage may not only apply to the market value and loss of your car, but to the contents within the car, such as stereo equipment, cameras, or other personal belongings. If your car is leased or financed, it might be a good decision to consider a comprehensive auto insurance policy in order to safeguard your investment. Floods and accidents with animals are rare, but do result in expensive repairs. Comprehensive insurance will repair the damages we normally do not think about. People who live in high-risk areas where natural disasters occur often, or perhaps live in rural or urban areas, are subject to a wide range of extra circumstances. Although this added protection is not required by states, there are many benefits to having this coverage. Comprehensive is not very expensive and usually carries a minimum deductible of $250 to $1,000. The insured must pay this deductible with each claim. Collision
Collision insurance is another type of optional coverage and protects the insured vehicle if involved in an accident. When getting a vehicle insurance quote for collision, you will see it is subject to a deductible that might range from $100 to $1500; this money would need to be paid up front in case of an accident. Most banks require this collision insurance on new or leased vehicles, so the added expense of this deductible should be factored in if you are carrying a bank note. In the case of rental cars, many companies require that you purchase collision insurance or that you sign a collision damage waiver in case you have an accident while driving their rental vehicle. The advantage to purchasing this type of insurance is that if you have an accident with another car, all the damages will be paid. Should you sign the insurance waiver, be aware that you would be liable for the repairs under this agreement. Some credit card companies provide rental car coverage if the full cost of the rental was charged to the card, so it might be worthwhile for you to check what is available. As opposed to more conventional types of insurance, a collision policy covers damages to your car in case of an accident with another vehicle or object, or provides a cash value if the car is not repairable. Insurance premiums tend to be high for a collision policy; therefore, if you have an older model car or if it is not in good condition, this type of coverage might be an unnecessary expense.
Liability insurance covers bodily injury sustained to another party, as well as compensates for property damage when the insured driver is deemed responsible. Each state carries a minimum required amount of property insurance; however, all policyholders have the option of increasing their coverage for an additional charge. One example of when this property damage policy would be beneficial is when an insured driver has an accident with a stationary object, such as a fire hydrant. Think of all the people who would have to be dispatched to shut off the water and clean up the streets, not to mention the domino effect this disaster could have on other people's properties and homes. No-fault insurance, otherwise known as personal injury protection (PIP), was meant to pay benefits to policyholders and sometimes passengers regardless of who was at fault. The idea behind this type of insurance was to provide quick payments to those injured in an accident, thus reducing the need for lawsuits. A PIP policy will typically cover medical bills, lost wages, and rehabilitation costs; however, it does not provide protections for pain and suffering. Many states allow drivers to choose between no-fault coverage and more conventional auto insurance.