This may seem like a naive question: but why is Auto Insurance necessary?
Put in the simplest terms, auto insurance is contract between a policy holder and the auto insurance company. This contract determines that the policy holder pays a predetermined premium, and the insurance company pays for any losses (the precise details are specified in the policy).
Auto Insurance provides coverage of medical expenses, property loss and liability. If an accident occurs, and you are at fault, the insurance company will likely have to pay for your medical bills and property bills. Additionally, it would have to pay for any injures that were caused by you to the other driver as well as any damages that were caused to his car. Similarly, if you are involved in a car accident and the other driver is at fault, their insurance company would have to cover your losses as specified by their insurance plan.
This arrangement helps to protect you from a lawsuit if you get into an accident. There are also times that you may have an accident with someone who does not have coverage, and your insurance covers you during those times as well. Thus, if the insurance company chooses to, they can sue the other driver for their losses.
There is a large number of parameters that affect your auto insurance premium: your age/gender/marital status/geographical location/credit rating/education/years of driving experience, as well as the type of vehicle you want to insure, the number of accident claims you've had, driving distance per year, miles driven to work, business use of your vehicle, theft protection and safety devices installed in your car, and whether you have multiple drivers and cars on your policy. For example, a male driver with multiple violations and bad credit history would have to pay a higher premium than a woman who has been driving for 20 years without any driving incidents.
Drivers who reside in highly congested areas, such as big cities, will probably pay higher premiums, as they are more likely to be involved in car accidents than people who live in rural areas where there are far fewer cars. That being said, they can probably get a discount if they install devices in their cars that reduce their risk of injury and loss, such as safety and theft deterrent devices.
To make sure that you get the lowest premiums on your Auto Insurance, make sure that you shop around. One company may find your occupation to be a higher risk than another company, while another may find that your geographic location poses a greater risk than another carrier. It never hurts to get several quotes that all compare the exact same coverage. You never know, if a company knows that you are shopping around they may have a way to beat the lower quote of their competitor.
