How Does Automobile Insurance Work

If you are going to be driving an automobile down the street, by law, you must carry automobile insurance.  Simply purchasing a policy with liability coverage is enough, but have you ever wondered how does automobile insurance actually work?

How Does Automobile Insurance Work?

All 50 states currently have some form of a minimum requirement for automobile insurance.  Your insurance rate will be based on a variety of factors such as age, gender, where you live, where your automobile is stored, your driving record, your credit score and how far you drive.

What is Liability Insurance?

Liability insurance covers you when you hit somebody.  Liability automobile insurance will typically cover the following:

  • The accidental bodily injury
  • Property damage

Collision insurance pays for our own damage

Comprehensive pays for our automobile for damages not caused by an accident.

Uninsured motorist coverage pays for your own cars damage if you are hit by a driver with no insurance or not enough insurance.

GAP insurance will pay the difference between your insurer pays in a total loss and what you owe in a remaining lease.