Car Insurance – A Personal Guide
A car insurance policy is a contract between an insurance company and the owner of a vehicle that protects the vehicle’s owner (or the person who leases the vehicle) from financial losses that result from car accidents. While many different types of car insurance policies are available, these policies in general cover the policyholder, the policyholder’s vehicle, and third parties. Third parties may include other drivers, pedestrians, or cyclists who suffer injuries from a collision with the policyholder or whose property is damaged in a collision caused by the policyholder. All vehicle owners and lessees in the United States must have car insurance. Specific requirements vary from state to state, but all U.S. drivers are required to have insurance against damages inflicted upon third parties.
An insurance policy can save a driver a considerable amount of money. For example, if an insured driver causes a collision that results in damage to another driver’s vehicle, the first driver’s insurance policy would pay a significant portion of the cost to repair or replace the other driver’s car. If the driver of the hit car also suffers bodily injury, the first driver’s insurance company would pay a significant portion of the injured driver’s medical fees.
Most car insurance policies in the United States last for six months. The person taking out the policy (the policyholder) pays the insurance company a fee called a premium, which is due every six months. If the policyholder is not involved in any collisions and does not cause damage with his or her vehicle, then most insurance companies will renew the insurance policy automatically at the end of each six-month term. In 2007 drivers paid on average $774 a year to insure a car in the United States. This means that U.S. drivers paid an average premium of $387 every six months for car insurance policies.