It is a form of risk management primarily used to hedge against the risk of a contingent, uncertainty loss.
Terms of vehicle insurance differ from every region depending on legal regulations. Vehicle insurance may also include theft of the vehicle, and other damages sustained from things other than traffic collisions like floods, storm surges water damage, etc.
Vehicle insurance can cover some or all of the following items:
- The insured party (medical payments)
- The insured vehicle (physical damage)
- Third parties (car and people, property damage and bodily injury)
- Third party, fire and theft
- In some jurisdictions coverage for injuries to persons riding in the insured vehicle is available without regard to fault in the auto accident (No Fault Auto Insurance)
- The cost to rent a vehicle if yours is damaged.
- The cost to tow your vehicle to a repair facility.
Policies should specify each item that is covered. For instance, car insurance can be insured against fire damage, accident damage, theft, or flood damages independently.
You can check online for insurance quotes depending on the car and place of residence it can go from $450 to $1000 per year.
Insurance quotes for vehicles in the U.S. are determined by the insurance companies like
GEICO, Progressive, Allstate, State Farm etc. The sum of annual payment is calculated according to complex scheme of points and bonuses, discounting the car cost and insurance driver's history for the past year.
The lowest insurance package will cover only a part of damage in a claim, the rest of the expenses will be covered by the driver.
The minimum insurance package does not cover a lot of things like legal defense and court costs and haulage of crashed cars.