Concepts of Car Insurance

Rudimentary Concepts of Car Insurance Explained

Insurance is required in 48 of 50 states in the United States of America. The only two that don’t require it are New Hampshire and Virginia. The former requires fellow drivers responsible for damages to pay up to $50,000 for personal injury damages and $25,000 in protection of personal property. Virginians can opt out of minimum liability car insurance packages, instead paying a $500 annually to help pay for other uninsured drivers’ accidents.

How did insurance get its start?

Insurance dates back as far as, if not farther than, ancient Greek and Roman society. More recently, insurance coverage became popular in the 17th century. Fire insurance was the first to surface in widespread fashion, which was created after the ever-devastating Great Fire of London in 1666. It lasted three days, tearing through over 13,000 houses and 85 churches. The Insurance Office for Houses was created by Nicholas Barbon and several other businesspeople, collecting monthly premiums to fund insurance payouts, and still turn a profit.

What is insurance?

Insurance providers outline specific terms and conditions that policyholders are covered against. Policyholders agree to insurance coverage for a set period of time, usually twelve months or a calendar year. If the agreed-upon terms are met in the event of a policyholder experiencing an accident, and the policyholder is current on monthly premiums due, and the policyholder submits a deductible needed to help cover the accident, the insurance provider pays out enough to cover damages incurred up to the agreed-upon dollar value.

What is the goal of insurance providers?

Insurance companies are businesses, trying their best to maintain lengthy service lives while turning profits every quarter. They make money by ensuring the total dollar value of premiums collected doesn’t exceed the amount paid out to satisfy claimants’ damages.

Modern technology has greatly aided the field of insurance, providing more appropriate premium billings to consumers and better identifying their potential risks. In the past, insurance agents were forced to perform lengthy, difficult, stress-inducing calculations using complex formulas to help determine the efficiency of operations. Just like hundreds of years ago, way back in the infancy of insurance policies, their goal is identical to today’s — turn a profit.

Insurance agents are also worried about their clients’ safety and welfare, however insurance companies as a whole simply try to hedge expenses against collected premiums.

So, what is car insurance?

Car insurance is — very much as its name implies — an agreement whereby a driver pays monthly premiums to maintain continuous insurance coverage on one or more vehicles she owns. Insurance policies usually follow either the car, driver, or both, meaning they might have coverage for driving vehicles not explicitly agreed upon in policies.

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