Car accidents are way too common in the USA. Over 6 million car accidents occur in the USA annually. Thereby, the US government has made it mandatory to have car insurance under the privileges and immunities clauses of Article IV of the US Constitution. This type of insurance is vital to cover the financial liabilities as a result of the accidents.
The auto insurance policy varies per the car, the credit score of the person, and the type of insurance agency. Currently, State Farm Insurance is the topmost in the US auto insurance market as it bags 18.1% of the market capital.
Setting Up the Trap (Key Points)
- Car insurance is a mandatory requirement in all the states of the USA (except two).
- Car owners have to purchase an auto insurance policy and renew it annually to cover the financial liabilities caused by a car accident.
- The constitutional law enforces this type of insurance. Car owners without insurance have to face fines, penalties, suspension of driver’s licenses, or cancellation of car registration.
- Virginia and New Hampshire are the only two states in the USA where it is not compulsory to have auto insurance.
- Many insurance firms provide vehicle insurance policies, and all of them have different premium rates and regulations.
- You have to pay a monthly amount to the insurance provider and they will cover you for property, personal injury protection (PIP), and legal costs.
- The car owners get an insurance card from the insurance firm after availing of the policy. This card serves the purpose when you have to claim damages after an accident.
What Is Car Insurance?
Car insurance is a compulsory insurance policy in almost all the states of the USA. With a constantly increasing annual rate of car accidents, the US federal government has made auto insurance a must-have requirement if you want to drive a car.
This type of insurance policy will provide the necessary financial cover when you get into an accident. If you are the driver at fault, your insurance policy will help to cover the losses of the other party involved in the accident.
Is Car Insurance Obligatory in All the States Of the USA?
Car insurance is an essential requirement in all the states of the USA except two. Virginia and New Hampshire are the only two states in the USA where having auto insurance is not enforced by law. However, the car owners have to reimburse the other parties if they are the cause of a car accident.
In these states, the liability of damaged from a car accident range from $25,000 to $50,000. The driver at fault has to pay the damages even if he/she does not have insurance coverage. Failure to pay the damages up-front will result in penalties, suspension of driver’s license, and cancellation of car registration.
The payment of up-front cost become a hectic task if the driver does not have an insurance policy. This is the main reason it has been enforced in the 48 states of the USA.
What Is the Coverage Scope of Auto Insurance?
Car insurance will cover a wide range of costs and damages resulting from a car accident. Two types of damage are possible in a vehicle collision: physical damage and property damage. The scope of the insurance policy will cover all the damages and costs incurred as a result of the accident.
Property Damage
It is the coverage that will reimburse the cost of damaged caused to the car in an accident. The car insurance will cover repair, paint jobs, and other costs to fix the accidental vehicle. Moreover, it also covers the theft of the vehicle.
Personal Injury Protection (PIP): Car Insurance
Injuries in car accidents can be fatal and non-fatal. Thereby, all types of car insurance policies cover the personal injuries resulting from the accident. Additionally, it covers emergency care and hospital care given immediately after the accident.
Legal Costs
Some severe car accidents involving death have to go through a long and cumbersome legal process to ascertain the party at fault. Therefore, the car insurance policies also provide coverage for the legal costs required throughout this period.
What Is the Tenure of An Auto Insurance?
The tenure of auto insurance varies by the insurance provider. However, the general practice is that the insurance policies are for one year. After the end of this period, car owners have to renew their insurance policy. They can renew it at the same rate or a different one if the provider has changed the rates.
Car owners pay a small amount in monthly fees to keep their premium insurance active. They get the benefit of this policy after an accident when the insurance provider covers all the upfront costs of the damages. Therefore, car insurance is very beneficial in terms of personal finance management.
Conclusion
Car accidents are a common sight in daily life. Even if you are not at fault, you may get into an accident due to the negligent driving of the other driver. More than 6 million accidents occur annually in the USA. Thereby, the Federal Government of the USA has made auto insurance mandatory in almost all states. Only two states, i.e., Virginia and New Hampshire, do not obligate auto insurance.
Vehicle insurance will cover property damage, personal injury protection (PIP), and legal costs incurred as a result of an accident. It is very advantageous to have this insurance policy as it will help you cover the upfront costs that are liable in a car accident. Thereby, it is in your best interest to have an auto insurance policy.