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When individuals obtain a driver’s licenses they will be required to provide proof that they have purchased adequate automobile insurance. Among other things, automobile insurance helps pay for medical bills and car repairs if drivers are in an automobile accidents. Every state requires drivers to purchase some auto insurance, and they specify the minimum amounts required. Individuals can purchase insurance from any company they choose, but should they be stopped by the police or should they be involved in a traffic accidents, they will most likely be required to supply proof of current insurance in their automobile or on their persons. There are several kinds of automobile insurance, including the following:

  • Liability. There are two principal aspects to liability insurance, bodily injury coverage and property damage coverage. Bodily injury liability insurance covers costs up to certain limits if drivers kill or injure someone else in an accident. In these cases the drivers’ insurance company pays for expenses like legal fees (if the insured is sued), medical bills, and lost wages of the other person if the insured is are at-fault. Property damage liability insurance covers the costs associated with damage to someone else’s car or other property if the insured damaged that property while driving. Both bodily injury and property damage liability insurance can be purchased in various amounts, but the state that licenses the individual to drive will set minimum amounts which that person must purchase.
  • Uninsured motorist bodily injury coverage. This type of insurance covers individuals for their bodily injury caused by a hit-and-run driver or from injuries caused by a driver who has no auto liability insurance.
  • Collision insurance. This type of insurance coverage reimburses drivers for damage to their cars if the car collides with another object. To figure out how much an insurance company will pay to fix the insured’s car, a claims adjuster may look at the damage, or the insured may be asked to get estimates from body shops. If the insured’s car is “totaled,” the insured person gets what the car is worth (according to tables of vehicle values) at the time of the accident.
  • Comprehensive insurance. Comprehensive insurance covers the cost of damage to the insured’s car caused by most other causes such as fire, theft, hail, or other natural disasters. If the insured have a loan on the vehicle, the insured’s lender may require the insured to carry this type of insurance.

The cost of automobile insurance varies according to a number of factors. For example, statistics show that drivers under the age of 25 are more likely to be involved in accidents; insurance companies charge them more for coverage. If drivers get a ticket for speeding or other traffic violation, their insurance costs may go up. Models of vehicles that are more dangerous to drive (e.g. convertibles) or cost more to repair if they’re damaged will generally cost more to insure than safer cars or cars that cost less to repair. And if the insured lives in a city with greater chances that the car will be hit, stolen, or vandalized are higher—, the insurance costs will probably be higher as well.

There are some things individuals can do to help keep the cost of insurance down:

  • Choose the vehicle carefully. Remember that some vehicles—like convertibles and sports cars—cost more to insure than others.
  • Consider the age and condition of the vehicle. If the vehicle is an older model, it may not be cost-effective to pay for insurance that covers physical damage to the older car.
  • Drive lawfully and defensively to avoid violations and accidents.
  • Increase the deductible and thus lower the premium, however realize that by doing so, it will cause the owner to pay more out of pocket each time they have a claim.
  • Students who get good grades may enjoy lower rates. For example, some companies give discounts to students with a B average or better.

Inside Insurance