Why is Automobile Insurance Needed?

The sight of an automobile accident with ambulances and EMT's treating injuries and a Medivac hovering waiting to make a landing, makes everyone's attention level rise. Seeing the destruction to an automobile caused by another automobile with the potential for injuries that are resultant quickly heightens anyone's awareness of how serious and deadly automobile accidents can be.

The use of Automobiles in the United States has created the need for Insurance Coverage to protect the owner of the vehicle for several purposes. It is easy to understand when the vehicle is damaged, that repairs are needed in order to be able to use the vehicle. It is equally easy to understand that if someone sustains an injury as a result of an automobile accident, the fast and expert medical treatment may be crucial to saving the injured party's life.


Coverage Provided
Insurance Coverage for automobiles is made up of two major coverage parts. One of the major parts is property insurance that provides for the actual damage to the insured's vehicle. The damage may be caused from automobile accidents as well as other types of damages, i.e. broken windshields, vandalism, stolen vehicles, hail damage, etc. Automobile accidents that cause damage to insured's vehicle is also part of the property portion of an automobile insurance policy.

The property coverage that provides for repairs of a vehicle that are caused by other than a collision with another vehicle is called "Comprehensive" or sometimes known as "Other than Collision". The coverage provides for repairs that are caused from other than a Collision with another vehicle or object. The insured is usually obligated for a portion of the damage repairs, known as a deductible. The insured is required to pay the first portion of the damages with the insurer providing for the repairs over and above the deductible.

The other property coverage is called "Collision" coverage provides for repairs that are required when damages are caused by colliding with another vehicle or another object, i.e. tree, wall, fence, etc.

The second major coverage is liability insurance, that provides defense for the insured when he/she is legally liable for injuries and damages to other parties, known as third parties as a result of an automobile accident. The Liability portion of the automobile insurance policy provides defense as well as damages to third parties that the insured is legally liable for. The damages may be injuries or damages to the other parties' property, but the liability coverage is designed to covered those damages that the insured is legally liable for.

Motor Vehicle Laws developed by state legislators establish the state requirements for owners of motor vehicles to show Financial Responsibility with regards to ownership and use of their automobile. These laws known as Financial Responsibility Laws establish the financial limitations that the owner of an automobile needs to show prior to the state issuing tags and the privilege to use the vehicle on state and local roads. These laws indicate how much financial limits that an individual must be able to display, i.e. $ 50,000, $ 100,000 etc. If the insured can provide the state a guarantee that he can demonstrate the financial availability of these limits, the state may waive the insurance requirement. When the insured does not have the financial availability, the only way for he/she can obtain the privilege to operate the vehicle on the state and local roads, is to have the insurance company guarantee the financial responsibility that backs up the insured.

When the insured is responsible for causing damages or injuries to another party, if insurance is not available, the insured would be required to pay for the damages and injuries out of his/her pocket. Having Liability Insurance provides the guarantee provided by the insurance company so that the insured does not have to provide the financial guarantee on his/her own.

In summary we all are affected by or have had experiences with automobiles and no doubt have been affected by automobile insurance. Understanding the coverage needed is crucial to being certain you are adequate protected.