Posted in Finance, Accounting and Economics Terms, Total Reads: 68
Definition: Auto Insurance
Auto insurance in an agreement between two parties whereby which the vehicle owner (insured), in order to mitigate his loss caused due to vehicle accident, purchases policy from the insurance agency (insurer). The insurer agrees to pay for the loss as defined in the policy and the insured pays a certain amount of money known as premium.
Auto insurance provides medical, liability and property coverage.
- Medical coverage includes cost of treating injuries and other medical expenses
- Liability coverage includes cost of legal responsibility to others bodily and property damage
- Property coverage includes cost of damage to vehicle.
The insurance premium or the amount that the policy holder has to pay depends on various factors such as age, gender, credit history, driving history etc. The insurance company may charge different amount from different policy holders depending on these factors.
Some of the key benefits of auto insurance are:
• Financial coverage against loss or damage to the insured vehicle.
• Financial aid against liability caused by injury/death of a third party or damage
• If there is damage or loss to your vehicle caused by an accident, explosion, theft, fire, natural calamities etc