Auto insurance, also referred to as vehicle insurance, is a type of insurance coverage bought for road motor vehicles to provide financial security against losses resulting from accidents. Auto insurance often covers against physical damage of the vehicle, damage to property caused by the vehicle, and bodily injuries or death of other people.
It is mandatory to insure vehicles in most regions but the extent of the coverage depends on the local regulations. Auto insurance basically covers the vehicle and any other third party person or property. In most countries, the vehicle owner is not covered unless otherwise expressly stated in the policy.The insurance company can, on agreement with the insured, extend the coverage to theft and vandalism.
Auto insurance is offered by most of the insurance companies. As a motor vehicle owner, you need to present your proof of ownership to the insurer and apply for a policy coverage. Applying for one can now be done online, directly to the insurer, or through an insurance broker.
There are various types of car insurance such as general insurance, comprehensive insurance coverage, liability coverage, and collision coverage. Premiums paid vary across the different insurance companies.The premium also changes with the age of the vehicle, driving record of the driver, and cost of the vehicle.
Liability coverage protects the vehicle owner against financial loss if found to be at fault for the accident. The insurer pays for claims made against the insured by third parties. Collision policies provide for vehicle replacement or repair in case of a collision. Comprehensive policy covers for losses resulting from areas other than road accidents, such as floods and theft.
The Insurer
Auto insurance is a highly competitive industry dominated by a few large firms. Entry into the industry is made difficult by stiff regulations and huge capital outlay requirements. It is more reasonable to underwrite automobiles together with other insurance products such as home and life insurance. Customers prefer to get a range of products from one company or buy a single product with wide coverage.
Automobile insurance is a multi billion industry that employs millions of people. Its growth is highly dependent on the growth of the auto mobile industry.The higher the sales of vehicles, the more the chances of growth in the auto insurance industry. In the US, the market growth is estimated at 2.34% with industry value at almost $200 billion.The global market growth is slowed down by worsening economic conditions. However, there is low penetration in some hugely potential markets.
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