How Auto Insurance Works

How Auto Insurance Works

Auto insurance is a legal requirement in California and almost all states in the country. It serves as a way to protect yourself in the event of an auto accident.

While most people carry a car insurance policy, many do not completely understand how it works, which can create issues if they need to make a claim.

The Basics

The Insurance Information Institute explains that auto insurance is an agreement that provides you with financial payments in the event of damage to your vehicle. The catch is that what the policy covers and the extent to which the insurance company will pay depend on your specific policy.

Policies can have various coverage amounts and types. Your policy will only pay out up to your limits and only for the specific events that you pay to cover. It is possible to get into an accident and not qualify for any payment from your insurance policy.

You must pay a premium to secure the insurance. Most policies will run for six months or one year. You can often pay the premium in full or make payments. If you make a claim against your policy, you also must pay your deductible before the insurer will pay.

Who It Covers

In general, your auto insurance policy will cover you, any driver in the household, and all vehicles you own. You must provide information to your insurer about household members and vehicles. If your policy does not list a person or vehicle, then they do not have coverage.

Some policies may extend coverage to you no matter what vehicle you drive or cover your vehicles no matter who drives them. Your policy may also have exclusions, such as not covering your vehicle if the driver is under a certain age.

What It Covers

You can secure auto insurance Woodland Hills CA that covers your vehicle or just offers liability for damage you do to others in an accident. You can also secure coverage for incidents where your vehicle suffers damage not related to accidents, such as damage from a hail storm or due to criminal activity.

Secure Insurance

When you buy an insurance policy, you should carefully read your documents to understand the coverage you are securing. You also should make sure to shop around as policy premiums can vary greatly.


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