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Auto Insurance Coverage: Accidents
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Collision coverage, liability coverage, uninsured/underinsured motorist coverage, and medical payments coverage are what most people think of when they hear the phrase "auto insurance." Each of these coverages protects you against some aspect of a potential automobile accident. But comprehensive coverage is another important part of your auto insurance policy. Comprehensive coverage insures you against damage to your vehicle caused by events other than an accident -- for example, fire, theft, flooding, or vandalism. Any of these things can happen to your car, even when it's not being driven. The risk of certain occurrences, such as theft and vandalism, may be heightened if your vehicle will be parked outside an unoccupied house for any length of time.
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WASHINGTON, July 24 /PRNewswire-USNewswire/ -- A study released today by the Federal Trade Commission confirms that African American and Hispanic drivers pay more for auto insurance because insurers use credit scores to determine premiums. The use of credit scores in insurance has long been a controversial practice because of its discriminatory impact on low income and minority families. "It's not fair that consumers with spotless driving records can be penalized with higher premiums just because of their credit score," said Norma Garcia, Senior Staff Attorney with Consumers Union. "Insurance premiums should be based on the risk of an accident, not a consumer's bill paying record for other goods and services. The FTC report concluded that African Americans and Hispanics are substantially overrepresented among consumers with the lowest credit scores. It found that "more than one-half of all African Americans have credit scores in the lowest quarter of the overall score distribution, and one-half of all Hispanics have credit scores in the lowest third of the overall score distribution."
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Varying claims experience - Auto insurance is priced to cover the costs of accidents that may happen in the future. Of course, companies cannot see into the future, so to do this, they use information about their past claims experience. Since each company has had different claims experiences with the groups of people they insure, the rates charged customers by different companies vary.
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Auto insurance is security. It’s a way to protect your car, yourself, and other drivers while on the road. Auto insurance policy holders pay premiums and in return, the auto insurance company subsidizes expenses involved in an auto accident. It’s a way to protect drivers against costly car repair, hospital, and even legal bills as a result of an auto accident.
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Auto insurance gives you protection against financial loss if you have an accident. The auto insurance contract is between you and the insurance company. In return for paying your regular car insurance premium, the insurance company agrees to pay for your losses as outlined in your auto policy.
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Most states have enacted compulsory insurance laws that require drivers to have at least some auto liability insurance (Part A). These laws were enacted to ensure that victims of accidents are compensated when their losses are caused by someone else being negligent. Except for the minimum liability you may be required to buy, many people with older cars decide not to purchase physical damage coverage. Often, the cost of repairing an older car is greater than its value. In these cases, your insurer will usually just "total" the car and give you a check for the car's market value less the deductible. Many people forgo the Part D coverage because of the relatively low value of their autos.
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