Auto insurance is purchased to cover liability upon vehicle accidents as well as the results of a traffic accident.
This type of insurance is mandatory as per government legislation.
Most states provide mandatory legislation requiring the car and the driver to both have an insurance policy covering them.
However, the degree assigned to these policies varies across different states.
Certain jurisdictions allow citizens to begin driving at the age of 16, thus a third party personal insurance is included in the license registration for person above this age.
Other states implement a compulsory third party insurance that must be taken in order for the vehicle to legitimately use the state highways.
This policy covers every other user of the vehicle.
The vehicle insurance includes the insured party, the insured vehicle, third parties and the insurer.
Coverage for liability owed to a third party may be considered without necessarily regarding to the auto accident in some jurisdictions.
The excess payments made to the insurer are otherwise termed deductibles and may either be compulsory or voluntary.
Compulsory excesses include the minimum amount your insurer accepts upon your policy agreement.
This may vary in consideration of personal details, driving record and the insurer's terms.
However, voluntary excesses are meant to reduce your premium payments.
This includes the payment of high excesses than those required by your insurer.
In the event of a claim on policy one may choose to surpass the amount of required excess paid to the insurer.
This lowers the risk factor involved with your vehicle and the insurer charges you less premium.
Premium charges vary across different state legislatures.
These are either mandated by the state or set by the insurer in line with the state's guidelines.
The insurer however can be quite flexible in setting charges that involve physical damage, the liability charges however are more or less constricted since they are mandatory.
Without government mandate, the auto insurance premium is determined through the practice of actuary where statistics are implemented.
These focuses on the car characteristics, coverage favored together with all the deductible, limits and covered perils, the driver's profile and the car usage.
Liability coverage is offered for bodily injury BI and property damage PD.
These are paid where the driver was liable for the injury of said parties.
Amount of coverage per money unit varies across jurisdictions with a minimum from which the insurer can increase coverage for additional charge.