You pay a premium at a regular interval and the insurance company is legally responsible to cover damages that your policy covers.

There are many different types of policies and it should be noted that the vast majority of state governments require an individual or entity to purchase at least basic auto insurance coverage in order to operate certain vehicles on public roadways. In many cases, if you operate a vehicle that is not insured, you can have your license revoked and pay large penalties. Some of the more popular coverage options for auto insurance policies available are;

Collision- this type of coverage protects your vehicle from damages that result from a car accident with another vehicle or with other objects on the road. If your vehicle gets into a car accident, the insurance will pay for repairs or if the car is totaled will cover the damages for the car’s worth.

Comprehensive- this type of coverage protects your vehicle from damages that are a result of things other than a collision. For instance, if your radio was stolen and the burglar broke your window and ruined your dashboard, the auto insurance will cover your losses or fix the damage.

Policies are usually for 6 months or a year and the rate that you pay for your premium is dependent on many variables including type of coverage, age, type of vehicle, location of residence and how you use your vehicle. There are many other variables that might be taken into consideration; however each insurance company has their own formula for calculating the cost of a policy.

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Connie Barker is the owner of several financial websites including those that deal with Auto Insurance

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