When considering the different types of insurance, vehicle insurance is probably one of the most common ones, and typically required by law if you want to drive a vehicle on a public road.
Vehicle insurance, or auto-insurance, is in place to cover the cost of accidents and damage caused by the result of a motor vehicle. This includes coverage of auto-accidents, damage to personal property, and damage to the vehicle itself. The amount of coverage can vary greatly from plan to plan, but there is typically a tier set by the government that every driver must meet.
There are two basic types of auto-insurance, namely full coverage and liability. As the name implies, full coverage auto-insurance covers damage to both the insurers vehicle, as well as any other vehicles involved. So, for example, if you were to run a stoplight and get in an accident, your car would be eligible for insurance funds, as would any other cars you damaged.
Liability insurance, on the other hand, covers only the cost of damage caused to others. So, in the above example of running a stoplight, your car would not be covered, but the insurance would cover damage to third-parties. Unlike other types of insurance, auto-insurance is considered to be standard and not a specialty insurance. As a result, it is much easier to get and there are generally a number of local agents you can talk with to setup a plan.
Most states require at minimum liability insurance. However, in some cases, such as when you purchase a car on credit, the lender may require, as part of the loan, that the vehicle is covered under full-coverage insurance. In many ways, the choice between liability insurance vs full coverage insurance is a game of probability and numbers, usually coming down to how much you can stand to loose.
For instance, for someone who drives an older car that is valued at less than $3000, it doesn’t usually make a lot of sense to pay an extra $100 a month to receive full coverage, whereas if you were driving a brand new BMW, you would probably want to ensure you had full coverage.
There are a lot of factors that go into the cost of insurance, for example the age and sex of the driver, as well as their accident and traffic history, will generally play some part in how much they pay for insurance. In some cases, it is also necessary to get special types of auto insurance. For example, if you are a stock car racer, you could not insure your race car the same way you do your home vehicle, instead, you would need to get special Nascar Insurance.
Most insurance plans offer a maximum allowed coverage, both for physical damage and healthcare. These plans are designed to also meet state or federal regulations, in regards to the amount of asset protection they provide. Those who have had a DUI or lots of accidents, will typically have a much harder time finding an insurance provider and when they do, it will typically be more expensive as well.