Auto Insurance
A Consumer’s Guide to Understanding His/Her Auto Insurance Policy

Auto Insurance comprises an enormous portion of all the property-liability insurance policies written.  In the United States alone, nearly one-half of all (personal) property liability policies (written) are for auto insurance.

The insurance is designed as a comprehensive contract in most areas of the world and covers liability loss due to collision of the auto, all other types of loss associated with the vehicle also known as comprehensive loss, and medical expenses that are incurred by the driver and passengers as well as other persons involved in an accident.  The coverage typically is applicable to anyone driving the car of the owner and has received (the owner’s) permission to drive it.  This means, as long as the vehicle is insured, drivers may be insured whether driving their own car, or the car of an individual who has granted them permission to drive it. 

For example, Jack a licensed driver and not a member of Jill’s household but rather an acquaintance, asks Jill if he may borrow her car to go to the store.  Jill, the insured, grants Jack permission to driver her automobile to the store providing him the keys.  Jack drives to the intended location; however, collides with another vehicle while in the parking lot of his destination.  Even though Jack is not the owner of the vehicle, Jill’s insurance should be able to cover the costs incurred from this accident.

Another example is when a company insures a fleet of cars and grants certain employees permission to drive the vehicles as part of the duties outlined in their jobs.  Should any one of these employees become involved in an accident while driving their employer’s vehicle, as long as the permission has been granted to the employee, the liability for the accident is covered under the group automobile policy of the employer. 

Auto liability insurance is a mandate of law in many countries.  Auto owners must carry insurance covering specified monetary damages.

The policy (normally) states what happens in the event the driver is covered by other auto policies that may (satisfactorily) cover a loss.  The policy also states the liability of individuals who have a legal responsibility for the driver involved in the accident.  An example of this would be the parents as responsible party to a teenage dependent.

Coverage usually compensates the insured for legal defense costs in addition to the liability limits of the policy.  However, many policies will exclude coverage when the insured drives his/her vehicle outside the country of which he or she resides.

In any case, an insurance professional or advisor will be able to offer the best possible recommendation to the consumer as to the best coverage correspondent to the individual’s own personal needs.